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Reducing Debt in 2012

2012-01-08T18:44:00.000-08:00

Trimming the fat may be the most popular New Year’s resolution out there, but trimming your debt is not far behind for a lot of people.

“Getting out of debt is more strategic than simply writing a check to your creditors,” said John Ulzheimer , President of Consumer Education with SmartCredit.com and contributor at the National Foundation for Credit Counseling.

“You can save hundreds or thousands of dollars by prioritizing your debts,” he added. “You can also get the benefit of a higher credit score by being smart about what you pay first.”
Ulzheimer recommends these ground rules for those who are serious about reducing their debt in 2012:

REMEMBER THE BASICS
Make sure you make your minimum payments to ALL of your creditors… on time… each month. If you can pay more, you should. But skipping a payment or paying late is a big no-no.

RETAILER CARDS FIRST
Choose your retailer credit cards (i.e. Macy’s, Gap, Nordstrom, etc.) as the ones you pay off first. Be aggressive. On average, the interest rate on these cards is about 10-12-percentage points higher than general use credit cards like Visa, MasterCard, and Discover.
“You should be able to knock them out faster because the balances on these cards are generally lower than general use cards,” said Ulzheimer.
“And by paying off retail cards, you’ll also improve your credit score because you’ve lowered the number of cards with a balance and the infamous “debt utilization” percentage – both of which are very important in your FICO scores.”

SOCK LESS AWAY…FOR NOW
Ulzheimer said you may also want to stop contributing to your 401K and IRA until you’ve paid off your credit card debt. The amount you are earning in “gain” is probably not as much as you are paying in interest.
“That means you’re losing money each month you have credit card debt.” Said Ulzheimer.

INSTALLMENT DEBT VS. CREDIT CARD DEBT
Don’t put installment debt in front of credit card debt. Rates on cars, houses, student loans are much lower than those on plastic. And you are probably getting tax advantages on your mortgage and student loans.

KNOW WHEN TO SETTLE
If your debt is in default or being handled by a collection agency, then you need to offer what’s referred to as a “settlement.”

“I never advise this unless you’re dealing with collection agencies,” said Ulzheimer.
“They normally acquire the debt for pennies on the dollar so your former $1,000 debt isn’t really what you owe the collector, but that’s what they’re going to try to collect,” he explained. “Start your offer at 10% of what they say you owe and work with them until a satisfactory settlement has been reached.

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A Credit Score That Tracks You More Closely Than You Think ...

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We Like NACA

2011-12-17T10:15:00.000-08:00

By: Robert W Linkonis Sr.

I tell all my clients all the time that I am the "Debt Collector Terrorist". This is because a large part of my credit improvement program is getting on the phone with collection agencies, banks, finance companies and debt collectors to make them violate the Fair Debt Collection Practices Act. This forces them to "cease debt collection activities" and work out a settlement or cancellation of the debt.

In the Richmond Times Dispatch last week, I heard about the NACA event coming to the Richmond Convention Center for four days. They were coming to Richmond to help homeowners who are in risk of losing their homes work with the banks to find a solution to help them to avoid foreclosure. I was intrigued with the concept. Especially because of how big the movement was and the size of the venue they were leasing. .

I immediately thought that this company could offer help to some of my clients at Credit Restoration Associates, so I started researching the company.

The first thing that got my attention was their CEO, Bruce Marks. He started the concept for NACA when he was a Union Activist. This evolved into his work as the Executive Director of the Union Neighborhood Assistance Corporation (UNAC) and was one of the first to expose predatory lending and it's devastating impact and the main reason we are in the housing mess to begin with.

What Bruce started doing was make the lives of bank executives a "living hell" unless they started helping the very consumers that they took advantage of. Yes - a percentage of those people should not have been given the loans, but due to predatory lending practices, they WERE given the loans. The banks made out like fat cats when the homeowner is stuck with no other option except foreclosure.

I read where Bruce Marks had been called an "urban terrorist" who went to a speech of the president of Fleet Bank, CEO Terrence Murray, at Harvard University, disrupted the speech and made this man's life miserable for four long years. Eventually, the bank caved and started modifying the loans and help the people stay in their homes.

Bruce's tactics sound like an extreme version of what I do to the debt collectors and collection agencies (the evil side of telemarketing). It actually inspired me to a large degree. Watch out debt collectors... so I had to go and see this event for myself. Here is a cell phone video clip of the event.

I wanted to meet Bruce Marks, but he was hosting the same event happening simultaneously in Charlotte, NC. Kindred souls will just have to meet another day.

The reason I wrote this post and am endorsing NACA is mainly because of the research done on the company and on Bruce Marks. Do some research yourself at: www. NACA.com.

Please feel free to call Credit Restoration Associates at (800) 648-5157 for all questions relating to NACA and home foreclosure. We will always guide you in the right direction. We are the only legal and bonded credit repair company in Richmond, so you know that we are the only legitimate company you will talk with. Our office is on southside in the Boulders Office Complex next to Chippenham Hospital. Call us today and schedule a FREE credit consultation!

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A Credit Score That Tracks You More Closely

2011-12-11T07:38:00.001-08:00

By: Tara Siegel Bernard
Anyone who has recently applied for a mortgage knows that lenders are already looking much more closely at your financial affairs. But soon, they’ll be able to easily delve into the deepest recesses of your financial life, accessing information that never before appeared on your credit report.

This week, a company called CoreLogic introduced a new type of credit file, which is based on the giant repository of consumer data it maintains on just about everything that most of the traditional credit bureaus do not: missed rental payments that have gone into collection, any evictions or child support judgments, as well as any applications for payday loans, along with your repayment history.
The new report also includes any property tax liens and whether you’ve fallen behind on your homeowner’s association dues. It may reflect that you now owe more than your house is worth or if you own any other real estate properties outright. It also is supposed to catch mortgages made by smaller lenders that the big credit bureaus may have missed.

The idea, CoreLogic says, is to provide lenders with more details about prospective borrowers, supplementing what they already know through the more traditional credit reports furnished by the big three credit bureaus, Equifax, Experian and TransUnion. Moreover, CoreLogic has formed a partnership with FICO — the provider of one of the most popular credit scores used by lenders — which will formulate a new consumer score based on the new data.

Perhaps it’s not surprising that a company decided to pull together this information, since much of it is already publicly available. But because it comes on top of all the other information that’s being collected about you — your exact location at every minute, where you’ve been on the Web — you can’t help but feel that some of these companies know more about your activities than your spouse.
While the CoreScore credit report became available to all types of lenders on Wednesday, the actual score, which will be ready in March, is being created specifically for mortgage and home equity lenders, though it could eventually be developed for other types of credit.

For many consumers, the files are likely to reveal black marks that previously went undetected, which may damage an otherwise clean record. But the companies contend that it works both ways: The added information could help consumers with thin credit files by illustrating positive behaviors elsewhere, say making timely rent payments.

So why now? Clearly, the two companies saw a business opportunity. Lenders, who just a few years back looked the other way, remain particularly skittish about mortgage lending and are looking for more information about prospective borrowers’ ability to pay their debts.

“Lending is very constrained and origination volumes need to grow to make for a profitable mortgage business,” said Joanne Gaskin, director of product management global scoring at FICO. “So lenders are looking for ways to expand, but to expand safely.”

An estimated 100 million American consumers will have a CoreScore credit report, while more than 200 million people have traditional reports from the big three bureaus. Though the new information can influence a lender’s decision, the new score isn’t replacing the classic scores used in the automated mortgage underwriting systems kept by Fannie Mae, Freddie Mac or the Federal Housing Administration, which buy or back the vast majority of mortgages (though CoreLogic said it has let the agencies know what it is doing). But the added information may sway a lender to charge you more (or less) in interest on a mortgage. Lenders of all stripes, including auto lenders, have access to the reports, and they will be marketed to employers and insurers, too.

Ms. Gaskin said that FICO was still tweaking the credit score’s formula. But the next step is to build something that will try to get even deeper inside your financial mind: The company plans to create a more sophisticated tool that will predict how you might behave under different loan terms.

Read the rest of the article HERE

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The Worthless Online Dispute System

2011-11-09T08:15:00.000-08:00

I do not recommend using the online dispute system that Equifax, Experian and Transunion offer because they are pretty much useless in regards to attaining true deletions of negative credit items.

The online dispute system, otherwise known as the "Expedited Dispute Resolution" is outlined in Section 611a(8) of the Fair Credit Reporting Act.

The key phrase to note is:

"the agency shall not be required to comply with paragraphs (2), (6), and (7) with respect to that dispute" if they delete the tradeline within 3 days."

• Paragraph 2 states that it is mandatory for the CRA to forward your dispute and all of the associated records you present to the creditor.

• Paragraph 6 states that the CRA must supply you with written proof and results of the dispute process.

• Paragraph 7 states that the CRA must supply you with the process of verification on demand from the person making the dispute.

The problem is that the law isn't detailed enough to say permanently delete or suppress the derogatory item.

The CRA can perform a "soft delete" for about a month and then the derogatory item can recur when the creditor reports it again in the subsequent 30 day cycle. This is because the CRA's aren't obliged to tell the creditor you disputed it at all!

This compounds their defense strategy of attrition and delay by allowing the consumer to think they are getting a permanent deletion, but it is only temporary solution. Since the creditor never knew it was removed, they will report it again and the CRA will put it right back on your report. Moreover, you have no proof the investigation or the supposed results ever took place that you would have received if the dispute was done by mail by a reputable credit repair company like Credit Restoration Associates.

See Below for the specific wording from the Fair Credit Reporting Act.

(8) Expedited dispute resolution. If a dispute regarding an item of information in a consumer's file at a consumer reporting agency is resolved in accordance with paragraph (5)(A) by the deletion of the disputed information by not later than 3 business days after the date on which the agency receives notice of the dispute from the consumer in accordance with paragraph (1)(A), then the agency shall not be required to comply with paragraphs (2), (6), and (7) with respect to that dispute if the agency

(A) provides prompt notice of the deletion to the consumer by telephone;

(B) includes in that notice, or in a written notice that accompanies a confirmation and consumer report provided in accordance with subparagraph (C), a statement of the consumer's right to request under subsection (d) that the agency furnish notifications under that subsection; and

(C) provides written confirmation of the deletion and a copy of a consumer report on the consumer that is based on the consumer's file after the deletion, not later than 5 business days after making the deletion.

(b) Statement of dispute. If the reinvestigation does not resolve the dispute, the consumer may file a brief statement setting forth the nature of the dispute. The consumer reporting agency may limit such statements to not more than one hundred words if it provides the consumer with assistance in writing a clear summary of the dispute.

(c) Notification of consumer dispute in subsequent consumer reports. Whenever a statement of a dispute is filed, unless there is reasonable grounds to believe that it is frivolous or irrelevant, the consumer reporting agency shall, in any subsequent report containing the information in question, clearly note that it is disputed by the consumer and provide either the consumer's statement or a clear and accurate codification or summary thereof.

(d) Notification of deletion of disputed information. Following any deletion of information which is found to be inaccurate or whose accuracy can no longer be verified or any notation as to disputed information, the consumer reporting agency shall, at the request of the consumer, furnish notification that the item has been deleted or the statement, codification or summary pursuant to subsection (b) or (c) of this section to any person specifically designated by the consumer who has within two years prior thereto received a consumer report for employment purposes, or within six months prior thereto received a consumer report for any other purpose, which contained the deleted or disputed information.

Call Credit Restoration Associates toll-free: 1(800) 648-5157 to have the professionals attain permanent deletion of inaccurate, obsolete or un-verifiable negative items from your credit reports.

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Girl Scouts Add New "Good Credit" And "Finance" Badges

2011-10-20T13:17:00.000-07:00

By Ben Popken on October 20, 2011 2:00 PM (Girl Scouts USA)

The Girl Scouts just finished their first redesign of their badges in 25 years, adding several new ones that will appeal to Consumerist readers.

There's now a "Good Credit," "Money Manager," "Budgeting," and a "Financing My Future" badge. But It's not just the consumer credit side that's getting represented, but also the other side of business. There's a new "Customer Loyalty" badge in the cookie sequence, as well as Meet My Customers and Business Plan badge.

For an Ambassador level scout in the 11th or 12th grade to earn the "Good Credit" badge, for instance, one of the tasks to accomplish is meeting a loan officer at a bank to discuss how one becomes a good candidate for a loan and what are the duties of a responsible borrower. After they've learned about credit reports and credit scores, the girls must make a pledge as to how they will use credit in their life.

A Girl Scouts USA spokesperson said that the badges add up to a program of financial literacy education that schools aren't providing.

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Six Ways to Beat Late Fees

2011-10-14T10:18:00.000-07:00

By Naomi Mannino

Did you know late fees are assessed on just about all your monthly bills? These include bills related to your mortgage, cellphone, cable, utilities, insurances, credit cards, library books, traffic tickets and even kids' activities. And, of course, Uncle Sam assesses severe late fees and penalties if you're past due with your tax payment.

"Issuers claim they are a way to account for risk, but our research in the credit card industry shows that is not the case. They are trying to maximize revenue with late fees," says Josh Frank, senior researcher for the Center for Responsible Lending.

Financial experts agree that credit card late fees have been reined in somewhat by the Credit Card Act of 2009, which limited late fees to $25 for the first violation and $35 for subsequent violations. But these rules have substantial loopholes and do not apply to small-business credit cards or any other type of late fees, which can ring up at $39 each and more for past due payments -- on your mortgage, for example.

Late Fees Have Big Consequences

"While late fees (for many debts) are not reported to the credit bureaus, the late payments certainly are. That loads your credit report with delinquencies and can trigger a rate increase on your other cards for all future purchases," says John Ulzheimer, president of Consumer Education at SmartCredit.com. - Say you have one of those zero percent interest credit cards. Many of those have a clause that says one late payment will have the account default to an interest rate as high as 35%.

Another caveat:

"Credit card issuers can revoke your air miles, rebates and rewards for late payments. You may be able to reinstate them, but you'll be charged a reinstatement fee," says Frank.

Dave Ramsey, personal finance expert and radio talk show host, says, "When you pay your bills late and incur that extra charge, you're simply paying more and more every month. You're putting yourself deeper into debt and making it harder to pay in full on time next month."

Late Fees Are Not in Your Budget

The 2011 Financial Literacy Survey from the National Foundation for Credit Counseling found that more than half of adults don't keep a budget or track their expenses. In order to break the cycle of debt and late fees, Ramsey suggests you first figure out exactly where your money is going. "Make a written budget that gives each dollar a name -- including late fees," he says. You will be able to see just how much money you've been paying in late fees every month and what you can cut if you can pay each bill on time.

Says Ulzheimer: "You have to pay on time and be smart about taking on liability. If not, you are going to have a serious compounding problem unless you bring in more income or spend less."

Don't Make the Same Mistake Twice

Chronic procrastinators pay a higher price in the long run.

"The Fed approved a cap for late fees on credit cards, but the rule lets issuers charge a higher late fee of up to $35 if customers make more than one late payment," says Frank. "Credit card issuers can also change your annual percentage rate, or APR, to whatever they want on new charges and balances in the future. If you go 60 days late, they can change your APR on your total balance and you'll simply have to accept the consequences."

In addition, multiple late payments may prompt electric companies and cooperatives to demand additional substantial deposits and fees, without which they can disconnect your service.

Know the Rules, Grace Periods and Due Dates

Due dates for all your monthly expenses are clearly printed on your bills and statements, but they can change. Under the Credit Card Act, a credit card company must send you a notice 45 days before they can change fees, rates or other terms, but other bill issuers and monthly expenses are not bound by those rules. While the Credit Card Act extended the grace period to 21 full days (from 14 days), the grace periods for other companies and service providers vary. Knowing this information for each of your creditors can save you late fees.

"The consumer who is going to win against late fees is one who notes due dates on a calendar and works toward setting a shadow date to pay recurring bills a month early in advance," says Ulzheimer.

If you're desperate, making a phone payment, paying in person or paying online (note any lead times for posting) by the end of the grace period can help because the consequences of convenience fees (typically up to $15) are much less than the consequences of the late payment and late fees (typically $25-$39 and up).

Don't Be Afraid to Ask

If something unusual happens to you one month, it's a good idea to approach your creditor.

"If you happen to get in a bind and make one late payment for a good reason, ask your lender to give you a goodwill adjustment of your late fee. Obviously that doesn't work if you are habitually late," says Ulzheimer.

You can also avoid late fees by calling up before the due date to request an extension for many regular expenses such as the phone, electric and insurance payments.

If you find payment timing to be the problem, call to request a different monthly due date that better matches the timing of your paycheck to avoid late fees, says Frank.

Take Proactive Rather Than Reactive Steps

According to the 2011 Financial Literacy Survey from the NFCC, one in four adults admit to not paying all of their bills on time. "If you're paying late fees regularly but not defaulting, you are able to pay but are choosing not to pay on time and incur the late fee. The larger problem is fiscal irresponsibility," says Ulzheimer.

"If you're living paycheck to paycheck and paying late fees, you're a ticking time bomb. If an emergency happens or you get laid off, you will be tempted by pawn shops, car title and payday loans that are an extremely expensive start on your way to total default on all of your obligations."

If you find yourself juggling too many payments or too much debt, consider credit counseling or getting into a nonprofit debt management program.

"Go through the government-regulated National Foundation for Credit Counseling and stick to the program of paying back your debts and your monthly expenses on time with lower interest rates and no late fees," says Ulzheimer. "It takes hard work, commitment and typically three to five years to complete, but you'll get out with excellent credit and no debt."

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Navigating the Three Credit Score System

2011-09-15T09:25:00.000-07:00

From: Mint.com

Each of us has three credit reports housed by the three major credit reporting agencies; Experian, Equifax and TransUnion. And, for most of us those three credit files are scoreable.

Most lenders will make decisions using just one of our credit bureau risk scores.

That means when you apply for a credit card or an auto loan, the lender is going to buy one of your three credit reports and one of your three FICO scores (or, less frequently, one of your three VantageScores) to make their lending decision.

The only exception to the “one report for one loan” rule is in the mortgage environment. the mortgage lender will almost always pull all three of your credit reports, all three of your FICO scores, and then base their decision on your middle score.

How Widely Your Scores Can Range

Each of your credit scores is going to be different, primarily because the information in our credit files is never 100 percent identical.

Additionally, because of the common lending practice of only pulling one credit score, it’s almost a guarantee that lenders are going to see different numbers for us depending one which of our three credit reports they happen to purchase.

For example, my FICO scores vary by 24 points from my highest score to my lowest.

My highest score is based on my Equifax data and my lowest is based on my TransUnion data. This means if I applied for any loan outside of a mortgage and the lender pulled my TransUnion credit report they’d see my lowest FICO score. If that “lowest” score fell below the lender’s risk threshold, I could be denied the loan or approved but with less advantageous terms.

Read the rest of the article HERE

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Can I Transfer My Credit History From Another Country?

2011-08-12T06:55:00.000-07:00

From: Smart Credit

Unfortunately you cannot transfer your credit information from one country to another. Not every country offers credit or has credit reporting companies. Some countries even have credit reporting companies owned by the government. The countries that have credit reports have different computer systems, currency, contributors and laws. The U.S, Canada and the U.K have the most sophisticated credit reporting systems. Here’s why transferring credit histories across boarders isn’t possible…

Computer Systems

The United States uses the Social Security Number as a unique identifier and other countries use other identifiers, such as name and address. Even though the three major credit reporting agencies, Equifax, Experian and TransUnion, have established credit bureaus in other countries, the systems aren’t compatible. Each county has different formats used for furnishing the credit data.

Currency

Each country has different currency except the European Union. The lenders contribute information to the credit bureaus in the currency of that country. If you still used your American Express, VISA or MasterCard in the country, your bills would not be in the same currency and would be subject to currency exchange fees. Point being, a $500 balance on an American Express card issued in the U.S is not the same as a $500 balance on a Visa card issued in the U.K.

Data Contributors

There are not many worldwide or “global” lenders. For the most part each country has their own unique banks, merchants, retailers, courts, etc. that would be contributing information. The exception would credit cards that are accepted worldwide. These companies report information based on the billing address. Inconsistency might be problematic for cross boarder credit reporting.

Laws

Some countries have laws that will not allow credit data leave the country. Each country has unique privacy and credit laws. For example, in the United States legislation is constantly changing regarding these laws; credit reporting agencies and lenders have to make changes to comply.

The Solution

You would have to establish credit in the country to which you are moving. A secured card may be a way to get started. A secured card is backed up with a savings account, which is used to set an equivalent credit limit. It would be best to consult with a banker to determine your options. If you plan to move back to your home country, you shouldn’t close your accounts. You want to still have a credit history when you return.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.

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Buyers Denied Loans will Get Free Credit Scores

2011-07-21T07:44:00.000-07:00

From: Bloomberg

U.S. consumers denied a credit card or auto loan will be entitled to free copies of their credit scores starting today.

The Dodd-Frank financial overhaul law passed last year expands credit-score disclosure rules and places the responsibility on financial companies to provide the numbers. It also forces lenders to give free scores to consumers who don’t get the best rates when borrowing, a practice known as risk- based lending.

“The purpose for the law was to provide consumers with greater access to and information about their credit scores,” Senator Mark Udall, the Colorado Democrat who proposed the provision, said in an e-mail. “By seeing the clearest picture possible of their personal finances, consumers can actively work to improve their scores,” Udall said in a statement earlier this month posted on his website.

The rule applies to financial-services companies that use scores to make loans. The most common scores are based on models established by Minneapolis-based FICO, formerly known as Fair Isaac Corp. (FICO), which are used to gauge a consumer’s financial health. The numbers, which range from 300 to 850, affect the ability to get mortgages, credit cards and insurance products, as well as the rates borrowers pay for them. Under current laws, all consumers are entitled to free annual credit reports, not their actual scores.

CFPB Report

“The law will affect credit-related transactions that occur tens of thousands of times every day,” said John Ulzheimer, president of consumer education at Costa Mesa, California-based SmartCredit.com, which offers consumers credit scores, monitoring and identity protection. It’s “something consumers have wanted and have not had the ability to execute for near 50 years now since credit scoring has been used.”

The rule also requires that a credit score be accompanied by the four main reasons why the number wasn’t higher, such as delinquent accounts, Ulzheimer said.

Get a Free Credit Score plus ongoing protection against credit fraud and identity theft with TrustedID

The Consumer Financial Protection Bureau, which begins formal operations today, is responsible for ensuring that lenders comply and give consumers who are denied credit or don’t get the best rates free scores. President Barack Obama nominated Richard Cordray earlier this week to head the bureau, which was created by the Dodd-Frank legislation. Jen Howard, a spokeswoman for the CFPB, declined to comment on the credit disclosure law and how it will be implemented and enforced.

Consumers may be unaware of the variety of credit scores available and may purchase a score thinking it’s their only “true” score, according to a report released July 19 by the CFPB. This could negatively impact them “if the credit scores the consumer buys give a substantially different impression of his or her credit risk than credit scores that a lender would use,” the report said.

Customer Notices

When Capital One Financial Corp. uses a credit score to determine an interest rate or decline an applicant, it will disclose the score in a notice to the consumer, said Pam Girardo, a spokeswoman for the McLean, Virginia-based bank.

Wells Fargo & Co. (WFC) said it had plenty of advance notice about the rule and was able to implement the necessary changes to provide scores, said Erin Downs, a spokeswoman for the San Francisco-based bank.

JPMorgan Chase & Co. (JPM), the second-largest U.S. bank by assets behind Bank of America Corp. (BAC), is “prepared to support new regulatory disclosure requirements,” said Steve O’Halloran, a spokesman for the New York-based bank.

American Express Co., the biggest credit-card issuer by purchases, will be disclosing credit scores and related information in notices when a score is used to decline an application for a credit or charge card, reduce the account limit or cancel the account, said Leah Gerstner, a spokeswoman for the New York-based company.

Custom Scores

Since 2004 mortgage lenders have had to provide credit scores to borrowers who are turned down, said SmartCredit.com’s Ulzheimer.

It’s unclear whether the rule also will apply to so-called custom credit scores used for non-lending, such as renting an apartment or purchasing insurance, according to Chi Chi Wu, an attorney at the National Consumer Law Center in Boston. Landlords and insurance providers may use custom scores derived from credit reports, which may not be covered by Udall’s provision.

Any lenders that use traditional FICO scores, such as student-loan companies or credit-card issuers, will have to supply scores to consumers, said Ulzheimer. The score is used by 90 of the 100 largest U.S. financial institutions, according to FICO’s website.

Wrong Assumption

A FICO score of 760 is considered an “elite credit score,” according to Ulzheimer, who said that any number at or above that figure would likely mean a borrower gets the best interest rate offer.

The average rate for borrowers with credit scores of 700 for a 5-year new car loan is 5.48 percent, yet those with scores of 700 or better can shop around and qualify for rates as low as 2.5 percent, said Greg McBride, senior financial analyst for Bankrate.com, the North Palm Beach, Florida-based website that tracks bank products.

Some consumers incorrectly expect that they’ll get their credit scores when obtaining their free annual credit reports at annualcreditreport.com, according to Liz Weston, author of “Your Credit Score.” Consumers can receive free copies from each of the nationwide credit bureaus, Equifax Inc., Experian Plc and TransUnion Corp., once every 12 months.

“People assume their credit scores are free because they get free annual access to their credit reports, and they don’t understand the difference between the two,” she said. A credit report contains information such as borrowers’ addresses, public records and payment history.

‘Right Step’

Consumers who aren’t entitled to free credit scores under the rule will have to pay $19.95 on myFICO.com for a FICO credit score and report.

Giving some consumers free credit scores is “a step in the right direction” toward transparency in consumer finance, said Udall, the Colorado senator.

“We already require that consumers be provided a free annual credit report,” he said. “I think we ought to go all the way and allow consumers to access their credit scores for free as well.

8 Secret Credit Scores (you might not have even heard about).

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New Credit Score Rules Pose New Complications

2011-07-19T09:04:00.000-07:00

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by: ANNAMARIA ANDRIOTIS from: SMARTMONEY

Starting this week, consumers who are denied credit or good terms entitled to see their credit scores!

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This week, consumers will finally be entitled to an explanation from lenders who offer them sky-high interest rates or deny them credit altogether. But critics say borrowers are still being left in the dark.

Part of the financial reform bill, the new rule kicks in on Thursday and says that any borrower who is denied credit or offered a higher-than-usual interest rate is entitled to see his credit score without even having to ask. The rule is supposed to wipe out much of the secrecy surrounding the lending process and give consumers the information they need to get a better deal in the future. And for the most part, this is the first time ever that consumers will have such access, says John Ulzheimer, president of consumer education at SmartCredit.com, a credit-monitoring site. Right now, consumers can't see their credit score for free except when they apply for a mortgage.

But critics say the rule has enough loopholes that the required information may leave consumers more confused than they are now. "We're concerned," says Chi Chi Wu, a staff attorney focused on consumer credit issues at the National Consumer Law Center. "What we would have liked to see is clear rules."

At its most basic, the information consumers receive could be confusing. Lenders are required to send applicants their scores if they are offered a rate that's higher than what the lender offers many of its customers, Ulzheimer says, but there's no way for consumers to know what the typical rate is. If a lender offers a high rate to everyone, an applicant isn't entitled to see his score.

And then there are several situations in which the rule gets bent. If a bank uses only its own scoring system with its own data to evaluate a borrower, it doesn't have to send that score to the consumer. If a bank uses its own scoring system in conjunction with a traditional credit score, the bank only needs to disclose the latter. The problem, experts say, is that if a bank is using a proprietary scoring system, a traditional credit score may not give consumers enough information about why they weren't given the best possible offer.

There are other industries that use credit scores to evaluate applicants but will mostly fall outside of the new rules. Car and home insurance companies routinely use an "insurance score," which takes into account an applicant's credit score and his insurance history those scores are exempt from the new rule. Utility companies also use their own scoring system, part of which includes a standard credit score, and they are likely to be exempt. But landlords may not be, if they use a consumer's credit score as a reason to deny them an apartment or to request a larger security deposit, says Ulzheimer.

For their part, the banks say that sharing their proprietary scores would be more confusing than helpful. Because banks' scoring systems are different, comparing among institutions is nearly impossible, says Nessa Feddis, senior counsel at the American Bankers Association. And the insurance industry says the credit score is only a small fraction of their evaluation process and that insurance scores are far more complicated than an applicant's credit history.

Despite the complications, consumer advocates do say having at least some idea of your credit score is better than none. "This is a learning opportunity," says Linda Sherry, director of national priorities at Consumer Action. "It will give people a practical example of how credit matters when they need to borrow money."

NEXT POST: Don't Worry, Employers Are NOT Going TO See Your Credit Scores !!!

The Medical Debt Responsibility Act May Aid Consumers.

8 Secret Credit Scores (you might not have even heard about).

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Don't Worry - Employers Are NOT Going To See Your Credit Score

2011-07-19T08:16:00.000-07:00

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Finally!! An accurate piece about credit scores and employment by: Janet Aschkenasy

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Yes or No: Can banks look at your credit scores when making a decision on whether or not you would make a good employee in their organization?

If you thought "yes" you would be wrong.

“This is the number one myth with respect to credit scoring,” consumer education and credit expert John Ulzheimer, told eFinancialCareers.

“Employers in most states are able to look at credit reports as part of their pre-employment screening but they can’t see the credit scores.

Trouble is, many people confuse the terms credit "report" and credit "score" and believe they are the same thing. “It’s a prevalent myth because a lot of people use the terms interchangeably. Yet, all three credit bureaus have gone on record time and again saying that they do not provide credit scores on the credit reports sold to employment screening companies.”

So, what is the difference anyway? You might be surprised:

A credit report is basically a listing of your credit accounts and payment history, month by month. If you’ve been late with payments, it will show how late: 30 days or 60 days, for instance. If you’re being courted by collection agencies, that will be included. If you’ve filed for bankruptcy, or have bank judgments or liens against you, your credit report will show that as well.

Clean credit reports are easier.

The fact is, however, that many folks who’ve have just about tapped out their credit cards—and may have poor credit scores—will present clean-looking credit reports, so long as they’ve been getting their minimum payments in on time.

A consumer might conclude their credit report looks good or even great because of a lack of anything derogatory. “However if you've got too much credit card debt, too many inquiries, and a poor mix of different types of accounts,” that same person’s credit score could be average—or even worse.

Credit scores focus largely on your payment history and how much debt you’ve accrued.

And for scoring purposes, lenders like a borrower to diversify and have a portfolio of secured debt like home equity lines of credit and auto loans, together with unsecured forms of debt like credit cards, where there is nothing to show for the loan in question, and less incentive to pay it off. FICO scores range between 300 and 850, with under 620 considered risky. So, how come banks and other financial institutions that commonly dig into prospective employees’ credit reports can’t obtain credit scores, as well?

“Credit scores were never built to predict prospective employee quality. The tool is not designed to evaluate employees so all three credit agencies—Equifax, TransUnion and Experian—have chosen to not sell a credit score along with the credit reports they sell for employment screening,” says Ulzheimer, who has worked both at FICO and Equifax over the course of his career.

Prospective employers do make liberal use of credit reports, however, since federal law permits that. And employers are most apt to delve into prospective workers’ (or even current employees’) credit reports in an industry like banking or even human resources where employees have access to sensitive information.

“You are representing the company and the company is somewhat liable for your actions,” says Ultzheimer. “They have to be comfortable with you before they give you the keys to the kingdom.”

Since 2003, it’s been easy for consumers to access their credit reports once ever 12 months, and yet 96% of these reports go unclaimed, says the credit expert. The one legitimate source for free credit reports is annualcreditreport.com, says Ulzheimer.

Besides getting a peek at your report, what else can you do if you’re concerned about poor credit plaguing your employment search?

You might try debt counseling: “The National Foundation for Credit Counseling is probably the most recognized and legitimate of the credit counseling agencies, says Ulzheimer.

“It is truly non-profit, and for a fee of $25 to $50 a month they will work with creditors to facilitate a debt management programs for you that can forgive a portion of the interest and a portion of the fees you are paying.”

“That’s a lot less than some of these other vultures will charge you,” he adds.

NEXT POST: The Medical Debt Responsibility Act May Aid Consumers.

8 Secret Credit Scores (you might not have even heard about).

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Credit Scores Will Be Easier for Consumers to get with New Rules from Federal Reserve, FTC www.Chicagotribune.com

2011-07-11T18:33:00.000-07:00

Credit Scores Will Be Easier for Consumers to get with New Rules from Federal Reserve, FTC
www.chicagotribune.com

Consumers who are denied credit or whose existing loan terms become less favorable will soon be able to get free credit scores under new rules from the Federal Reserve Board and Federal Trade Commission.

Read the rest of the article here: http://www.chicagotribune.com/business/ct-biz-0708-credit-score-20110708,0,5422211.story

Next Post: The Medical Debt Responsibility Act May Aid Consumers.

Fantastic information. This is worth watching:

Medical Debt Responsibility Act May Aid Consumers: MyFoxATLANTA.com

Medical Collections Could Be Removed From Credit Reports!

2011-06-28T10:25:00.000-07:00

The Medical Debt Responsibility Act May Aid Consumers.

Fantastic information. This is worth watching:

Medical Debt Responsibility Act May Aid Consumers: MyFoxATLANTA.com

Free Credit Score at Credit Sesame

2011-05-10T16:05:00.000-07:00

I am posting this new beta site because I see value to Credit Restoration Associates clients here.

Check it out: Free Credit Score at Credit Sesame. It's the Experian National Equivalency Score - not the FICO score (which is what the mortgage lenders and automotive finance managers see), but it's still free.

There also seems to be a ton of useful tools here. The following are quotes from the Credit Sesame website:

"Thousands of Loans, Unbiased Advice"

We analyze thousands of loans from major banks, then evaluate them against your own personal financial situation. In minutes, we narrow them down to the three options that will save you the most money over time.

"Complete Analysis, For The Whole Picture"

We show you where you stand financially and keep track of the lay of the land. We analyze your loans, credit, mortgages, credit card debt – in minutes, and give you the facts: your free credit score, home value data, debt to income ratio and whether your debt is optimized. The more you know, the better financial decisions you can make. See your free credit score & financial stats

"Bank-Level Analytics Working For You"

We give you the same analytics that banks use to make lending decisions. These powerful tools track and evaluate your entire credit situation. Then our technology evaluates over 5,000 scenarios against loans from all major banks to give you advice that’s personal – and prequalified.

Identity theft protection: They claim that you are notified the instant your identity is compromised. ID Analytics?

Nice product but I'm still vetting it. My final take will be in a future post, but overall, I like this program.

Here's the link, let me know what you think: http://www.creditsesame.com

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Next Post: 8 Secret Credit Scores (you might not have even heard about).

Get A Free Transunion Credit Score HERE

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Remodel Your Credit Before You Begin Renovating Your Home

2011-04-19T15:04:00.000-07:00

Improved resale value, more space or better use of the space you have, and a brand-new room to enjoy... It may be hard to imagine a downside to renovating a kitchen or bathroom. But you could discover a dark side to remodeling - deciding to finance the project by borrowing the money before checking your credit.

With the real estate market still limping along in many areas of the country, you may decide that it makes more sense to improve the home you have, rather than move into a new one. And you wouldn't be alone in thinking that way. Harvard's Joint Center for Housing Studies predicts Americans will spend nearly $141 billion on remodeling in the first half of 2011.

The economy may be driving the renovation trend another way, as well. Interest rates are low - for those who can qualify for them, with good credit.

So it makes sense to know what's on your credit report and what your credit score is before you make plans to renovate your kitchen, bath or any other room in the house.

If you plan to use credit to finance a renovation project (and few of us can afford to pay cash these days), be proactive and understand your credit with these simple steps:

1. Find out where you stand.

Although it's fairly easy to obtain a free credit report and score online, many Americans aren't confident about where they stand in terms of credit. Your first step toward making your renovation dreams a reality is to find out how potential lenders will perceive your credit worthiness.

Reviewing your credit score through Websites like Transunion's TrueCredit can help you get a clear picture of how potential creditors might perceive your use of credit. Membership in the site's credit monitoring membership can also help you keep on top of your credit by sending you e-mail alerts when something changes on your credit report.

* Take action - and keep at it.

If you find errors on your credit report, contact the major bureaus and dispute the errors. It's also a good idea to monitor your report regularly, throughout the year, as identity theft or instances of fraud could show up on it, alerting you quickly to a situation you otherwise might not have discovered for months.

Your credit score is a fluid number, and it can change throughout the year as you improve your payment records, miss or delay a payment, and open or close lines of credit. Many factors go into calculating your credit score, but generally bureaus take into account how reliably you pay bills on time, the total amount you owe in secured and unsecured debt, and how much unused credit you have available.

* Get an idea of the impact.

Knowing your credit score not only better empowers you to bargain for the optimum loan terms, it can also help you understand how that new renovation loan will affect your score and report.

Whether you're remodeling just one room in a house or the entire house, funding the project can affect your finances, including your credit score. If you make sure you understand - and have a handle on - your credit before undertaking a project, you'll be more likely to reap the rewards, and avoid the downside, of home renovation.

Reprinted by permission from the Richmond Times Dispatch - published print edition Sat April 16, 2011.

Get A Free Transunion Credit Score through TrueCredit HERE

Next Post: 8 Secret Credit Scores (you might not have even heard about).

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8 Secret Scores That Lenders Keep Part 1

2011-04-14T13:01:00.000-07:00

By Liz Pulliam Weston from MSN Money

Lenders track every last detail of your spending habits, and then use the data to estimate not just how big a risk you are but how profitable a customer you might be.

Recently my husband and I received nearly identical balance-transfer offers from our respective Bank of America cards. The offers were identical, that is, except for the rates we'd be given. He was enticed with a 0% rate. Mine was 2.99%.

We live at the same address and share the same income. We both have high credit scores (although his are, annoyingly, a few points higher than mine).

So are these different offers evidence of rampant sexism on BofA's part? Hardly. The pitches were the result of complex and largely secret scoring systems that most financial institutions use to boost profits while limiting losses.

You've heard by now of credit scores, the three-digit numbers lenders use to gauge your creditworthiness. Credit scores predict how likely you are to default on a credit account or loan; they're used to help set interest rates and terms.

What you may not know is that credit scores are just the start of the way financial institutions evaluate you, and they're not even the most commonly used scores -- far from it.

While a credit card issuer might check your credit scores once a month as part of its regular account review process, the same company probably checks other kinds of scores every time you pull out your plastic.

"Every single transaction has some sort of score being generated," said credit scoring expert John Ulzheimer, president of Credit.com's education services and author of the book "You're Nothing But a Number." "Generally they're checking whether the transaction is likely to be fraudulent, but there are other reasons as well."

You're being judged by the type of transactions you make, how you pay your bills, how much profit you generate for your lenders and a host of other factors. The scoring formulas might be created by the credit bureaus, third parties or the lenders themselves. Banks and other financial institutions are tight-lipped about many of the details of these other scoring systems, but they're used to determine:

* The kind of credit card offers you get.

* Whether your credit limits are raised or suddenly lowered.

* Whether your over-limit credit or debit transactions are approved.

* Whether your card issuer calls you about a suspicious transaction, blocks it or shuts down your account.

* How cooperative your issuer is about waiving fees or lowering your interest rate.

* How quickly your issuer calls you if your payment is late.

* Whether a collection agency contacts you about an old debt and how hard it pushes.

Your credit scores are just the start.

Here are some of the ways you might be scored, roughly following the life cycle of a credit account. You're very familiar with credit-risk scores, but the other eight rarely see the light of day.

Credit-risk scores: These are the credit scores most of us know. The leading credit score, the FICO, was created by Fair Isaac and ranges from 300 to 850, with scores over 700 generally considered to be low risk.

Response score: This score predicts the likelihood a consumer will respond to an offer of credit, such as a new card or a balance transfer offer. Credit card issuers use response scores to decide whom to target and how to customize offers to appeal to particular consumers, said Chisoo Lyons, vice president for analytic research at Fair Isaac, which created the leading FICO credit score as well as many other scoring formulas.

Application score: This score scoops up data from your credit application that's not included in your credit scores, said Ulzheimer, who worked for Fair Isaac and for credit bureau Equifax before joining Credit.com. That data include how much you earn, how long you've lived at your current address and how long you've worked for your current employer. Application scores are typically used in combination with other scores, such as credit and bankruptcy scores, to determine whether to open the account, what rate to give and how much credit to extend.

Bankruptcy score: Credit scores typically predict the chance you'll miss a payment in the next two years. Bankruptcy scores predict the likelihood you'll throw in the towel on your debt entirely and file for Chapter 7 liquidation or a Chapter 13 repayment plan, said David Rubinger, spokesman for credit bureau Equifax, which produces the leading Bankruptcy Navigator Index or BNI. BNIs range from 1 to 300, with the higher the score, the lower the predicted risk. Most lenders use both credit scores and bankruptcy scores, Ulzheimer said, to help assess the risk that you won't pay.

Revenue score: Lenders want to maximize the profitability of each account, and one way they do that is to gauge how much money each account is likely to generate.

Continue to 8 Secret Scores That Lenders Keep Part 2

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8 Secret Scores That Lenders Keep Part 2

2011-04-14T13:00:00.000-07:00

Attrition-risk score: Attrition risk refers to the likelihood a user will stop using a card, and attrition-risk scores are typically used in combination with other scores to determine what to do next if you look ready to bolt. If your account generates a lot of revenue and is deemed at low risk for default or bankruptcy, for example, the issuer might aggressively try to keep your business by jacking up your credit limit, lowering your rate and pelting you with convenience checks. If your account isn't that profitable or is deemed risky, on the other hand, the issuer might just let you go.

Behavior score: Credit scores provide a snapshot of how a consumer is handling all of his or her credit accounts. Behavior scores, by contrast, typically focus on a single account (the one you have with that particular creditor) but take in a broad view. Does the user pay off her bills every month, carry a balance occasionally or frequently pay only the minimums on her cards? That information typically isn't available on a credit report, but is contained in the issuer's databases, along with other data that helps the score describe how she handles her account. A behavior score might be used in conjunction with other scores, such as credit or bankruptcy scores, to decide whether an overdue payment is an aberration (maybe he's traveling?) or a sign of impending financial crisis (maybe we should call the consumer today and find out what's going on).

Transaction score: These are the scores run each time you use your plastic to determine whether the transaction should be approved. Issuers are typically looking for signs the transaction might be fraudulent, but transaction data can be used in other ways as well (more on that in a minute).

Collection score: You've failed to pay for long enough that your card has been turned over to a collection agency. These agencies use collection scores to assess the likelihood that you'll be able to pay them and sort their list of debtors accordingly. Collection agencies watch for all kinds of evidence that your financial situation may be improving, Ulzheimer said, from better credit scores to another collector's account suddenly being reset to 0, indicating it's been paid off.

If, on the other hand, your credit is in the dumps or the amount involved is small, the collection agency may make minimal effort.

"Why spend time and effort to track you down if you're not likely to pay?" Ulzheimer said. "Probably the most cost-effective (tactic) is to write you a letter, put it on your credit report and wait for you to call them."

Waiting, watching, hoping...

As several of the previous examples show, lenders and others often combine different types of scores to assess you. Sometimes the evaluations become pretty sophisticated.

One scoring model sold to lenders, the TRIAD Transaction Score created by Fair Isaac, takes into account credit risk, attrition, potential revenue and patterns in the user's charging behavior that might indicate higher or lower risk.

Let's say you typically spent $1,000 a month on your credit card, usually on toys, clothes and eating out at family restaurants. Then one month your spending changes -- you still spend $1,000, but now it's to get cash advances, buy groceries and gamble at the local racetrack.

The scoring formula may decide you've gone from Stable Family Guy to Desperate Unemployed Guy and flag the issuer that you've become a higher-risk customer.

Instead of a single three-digit number, TRIAD generates three numbers. Typically the scores will include a credit-risk score and an attrition score, both somewhere on a scale of 50 to 999 with higher numbers being riskier, plus a dollar figure to indicate the account's potential revenue generation.

If the issuer decides the risk of your default outweighs the profits you generate, it might reduce your credit limit. If you're a profitable customer, on the other hand, the card issuer might wait awhile to see if your situation improves.

Yes, it is rocket science...

How issuers decide what to do with the scores depends on their companies' policies, and even those are often changing targets. Credit card issuers constantly tweak their systems to maximize profits and minimize losses.

"Those guys at NASA have nothing on the Ph.D.s who work for credit card companies," Ulzheimer said. "They're Mensa-level smart, and they are very, very sophisticated in the ways they use credit data."

Which is not to say issuers, or the scoring systems they use, never make mistakes. Case in point: an issuer sending two different offers to the same household, as they did to ours. Most issuers use software to make sure that doesn't happen, Ulzheimer said; they don't want us comparing notes. (Bank of America didn't return my calls about the issue.)

In fact, financial institutions in general aren't eager to reveal how they make the decisions they do -- and that's not likely to change soon. While you have a federal right to see your credit scores, that's not true with other scores, which lenders often consider proprietary information.

Is that a crisis for consumers? I have mixed feelings about that. You clearly need to see your credit scores, since they influence so much of your financial life across the board. But given how many of these other scores are in use, how different they are and how many ways they're applied, I'm not sure I really want to see them all.

Back to 8 Secret Scores That Lenders Keep Part 1

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Experian Tool Adds Rental Info to Some Credit Reports

2011-03-01T08:17:00.000-08:00

By Martha C. White - RSS Feed

Credit-reporting bureau Experian has begun adding rental payment histories to Americans' credit reports, following the company's acquisition of RentBureau last June.

For people with what are referred to as "thin" credit files, such as students, new college grads or recent immigrants, this is an important tool to help them build a credit history without the expense of an installment loan or the temptation of a credit card.

"The biggest effect of the data is on individuals who have 'thin' credit files," says an Experian spokesperson "What's more, during this year, they'll only be reporting positive payment information. Starting next year, however, if you don't pay your rent on time, you could find it tougher to land an apartment in the future, because negative activities will be recorded as well.

As of last month, rental information is incorporated into a person's VantageScore credit score; industry analysts say it's likely that details about rent-paying could be incorporated more broadly into credit reporting in the future.

With the addition of the RentBureau data, more than 45% of the individuals who either couldn't have a score calculated, or were in the 'F' category, are now moved up by at least one score bucket.

Given the new income restrictions and limitations on young people obtaining credit cards, this shift has the potential to be hugely beneficial to a population that would otherwise have to pay more for the privilege of obtaining credit.

If you rent, don't assume that Experian has your information; right now, only about 8 million renters' data is in RentBureau's files, which represents only a small slice of the estimated 96 million renters in the country. The rental details are considered for purposes of the scoring model to be an installment loan like a car payment because they have a fixed payment obligation each month.

One final note: If you've never rented, your score won't be negatively impacted. Although the credit scoring model faults people for not having both installment (such as a car loan) and revolving credit, it won't take you down a notch if you weren't a renter.

Link to original article: http://www.walletpop.com/2011/02/26/experian-tool-adds-rental-info-to-some-credit-reports/

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Rewriting the Rules of Credit

2011-02-17T14:53:00.000-08:00

In his new book, A Call for Judgment: Sensible Finance for a Dynamic Economy, economist and Tufts University professor Amar Bhidé laments a banking system that bases decisions on complex algorithms rather than good old-fashioned loan reviews, a practice that has greatly choked off financing to small business.

Auto Finance Insider interview excerpts:

Lending used to be a subjective matter. Why did we wind up with a system of stringent rules?

First, there was an ethos that developed in academia that said that all risks can be quantified. What economists did was say the stuff that we cannot quantify is really on the margin. And what's essential to risk, we can pretend to reduce to one or two numbers. Once you do that, then you can create a machine. If you're required to think of risk in a broad, holistic kind of way, it's much more time-consuming.

Implicitly and explicitly, the government embraced this view of risk. Almost unwittingly, [Fannie Mae and Freddie Mac] created the largest mechanistic model of lending in the world simply by saying we will underwrite the risk of mortgages if they meet XYZ criteria. If you followed the model for a loan, the government would take it.

The interesting part is that not all lending can be equally mechanized and scaled up. And therein lies the rub. It means that if I'm a bank, and I want to expand, I'm going to favor the activity where I can put pedal to metal fastest.

And small-business lending does not fit into that mold.

Correct. It was and remains an activity that requires a banker to go and talk to the borrower. Analysts can pretend that all housing loans are the same, but with small business, the pretending completely defies belief. So small business gets the short end of the stick.

What about the bank bailout? Why did so little money reach small businesses?

The way to get more credit into the hands of the small-business owners has been long impaired, and for the money to reach the people who need it, you need more channels. Small-business lending requires a mechanism that frankly will take a long time to rebuild.

How can the U.S. revive small-business lending?

The government should demand that any depository institution whose liabilities are ultimately guaranteed by the taxpayer make its loans prudently—where a banker and an examiner understand the risks and where each loan is made with a case-by-case examination of the risk in the bank. Small-business lending will remain risky. But there's a difference between a risk taken after a bank has obtained a deep understanding of the situation and a risk taken based on algorithms or rules that do not in fact make a lending decision safer.

What role should regulation play?

I think one of the great strengths of America is people's willingness to borrow and consume in the expectation of a better tomorrow. That is one of the things that distinguishes America from Europe. I think it's fantastic that three million iPads have been sold even in a recession. But that primal urge needs to have a brake applied to it sometimes and the brakes used to be provided by the banking system. Something healthy and useful was taken to extremes. It becomes insane. It's like, protein is good for you so you go on an all protein diet.

For regulators, instead of continuously experimenting with things like quantitative easing, why not pay attention to the things we know are bad?

But there's no hard and fast rule that says more regulation is good or more regulation is bad. You have to look at the facts of the case. And the facts said with banks that self-policing did not work. We ought to examine the brakes.

I agree wholeheartedly!

You should buy this book - it is Awesome:

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Attorney's Advice - Print and Save for Reference!

2011-01-13T08:00:00.000-08:00

In this time of fraud and identity theft, it's better to be prepared. Here is some useful info.

ATTORNEY'S ADVICE - NO CHARGE

Read this and make a copy for your files in case you need to refer to it someday. Maybe we should all take some of his advice! A corporate attorney sent the following out to the employees in his company:

1. Do not sign the back of your credit cards. Instead, put 'PHOTO ID REQUIRED.'

2. When you are writing checks to pay on your credit card accounts, DO NOT put the complete account number on the 'For' line. Instead, just put the last four numbers. The credit card company knows the rest of the number, and anyone who might be handling your check as it passes through all the check processing channels won't have access to it.

3. Put your work phone # on your checks instead of your home phone. If you have a PO Box use that instead of your home address. If you do not have a PO Box, use your work address. Never have your SS# printed on your checks. (DUH!) You can add it if it is necessary. But if you have It printed, anyone can get it.

4. Place the contents of your wallet on photocopy machine. Do both sides of each license, credit card, etc. You will know what you had in your wallet and all of the account numbers and phone numbers to call and cancel.. Keep the photocopy in a safe place.

I also carry a photocopy of my passport when I travel either here or abroad. We've all heard horror stories about fraud that's committed on us in stealing a Name, address, Social Security number, credit cards..

Unfortunately, I, an attorney, have firsthand knowledge because my wallet was stolen last month. Within a week, the thieves ordered an expensive monthly cell phone package, applied for a VISA credit card, had a credit line approved to buy a Gateway computer, received a PIN number from DMV to change my driving record information online, and more.

But here's some critical information to limit the damage in case this happens to you or someone you know:

5. We have been told we should cancel our credit cards immediately. But the key is having the toll free numbers and your card numbers handy so you know whom to call. Keep those where you can find them.

6. File a police report immediately in the jurisdiction where your credit cards, etc., were stolen. This proves to credit providers you were diligent, and this is a first step toward an investigation (if there ever is one).

But here's what is perhaps most important of all: (I never even thought to do this.)

7. Call the 3 national credit reporting organizations immediately to place a fraud alert on your name and also call the Social Security fraud line number.. I had never heard of doing that until advised by a bank that called to tell me an application for credit was made over the Internet in my name.

The alert means any company that checks your credit knows your information was stolen, and they have to contact you by phone to authorize new credit..

By the time I was advised to do this, almost two weeks after the theft, all the damage had been done. There are records of all the credit checks initiated by the thieves' purchases, none of which I knew about before placing the alert. Since then, no additional damage has been done, and the thieves threw my wallet away this weekend (someone turned it in). It seems to have stopped them dead in their tracks..

Now, here are the numbers you always need to contact about your wallet, if it has been stolen:

1.) Equifax: 1-800-525-6285 1-800-525-6285

2.) Experian (formerly TRW): 1-888-397-3742 1-888-397-3742

3.) Trans Union : 1-800-680 7289 1-800-680 7289

4.) Social Security Administration (fraud line):
1-800-269-0271 1-800-269-0271

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Roadloans

2010-12-09T13:47:00.000-08:00

As promised, here is the pre-approval link to RoadLoans.

Recently, they have been issuing some VERY STRONG approvals for our clients for new or used car auto loans.

After you fill out the application and get approved, they mail a "blank check" to you with instructions that you need to give to the Finance Manager at whichever car dealership you choose to buy your next car, truck or van. Basically - Give them the paperwork and go pick out your car.

Just do a small favor please - email a picture of your family standing next your new car to Robert@CreditRA.com. I can't wait to see it!!!

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Congratulations to Nancy

2010-11-02T21:14:00.000-07:00

In addition to being a valuable asset at CRA, Nancy recently finished pursuing another passion - interior decorating.

She is a new graduate from University of Richmond Interior Decorating Program.

We are all very proud of her!!!

Now she wants to re-design most of the house. Why am I not surprised? - oh well... here's the checkbook.

What else can I do?

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What is a Credit Repair Company?

2010-10-07T09:40:00.000-07:00

A good informative article by John Ulzheimer - President of Consumer Education of Credit.com

Switzerland; the land of great skiing, hush hush banking, Roger Federer, and international neutrality. It’s that neutrality I’m going to imitate while writing this article. Why?

The subject of credit repair is a powder keg, lightening rod, PR loser…chose your own metaphor.

Opinions on the subject seem to be polarized, meaning you either like credit repair companies or you hate credit repair companies.

First off, what is a credit repair company?

According to the Credit Repair Organizations Act (CROA), the Federal law that defines how credit repair companies must do business, a credit repair company is actually referred to as a credit repair organization (or CRO) - and a CRO is anyone who “sells, provides, or performs any service, in return for the payment of money or other valuable consideration, for the express or implied purpose of improving any consumer’s credit record, credit history, or credit rating.”

There are some exceptions to that rule.

If you’re non-profit and perform those duties then you’re not a CRO.

If you’re a bank or a credit union then you’re also not a CRO.

But if you are for profit, aren’t a bank, and sell services promising to help a consumer’s credit then you’re a CRO, whether you want to be one or not.

There are people who believe all credit repair is illegal.

That’s not true. “Credit repair is anything but illegal if you do it the right way,” says Edward Jamison, a lawyer and the founder of CreditCRM, a developer of credit repair business software.

And, the “right way” means you fully comply with the requirements of CROA and any state equivalent. How exactly do you comply with CROA? According to credit repair experts, CROA states that a CRO must do the following things, and others, in order to be in compliance:

1. Provide mandatory disclosures letting consumers know, among other things, that they can dispute credit information directly with the credit bureaus.

2. Avoid making any misleading or untrue statements about any consumer’s credit worthiness. You can’t say, “We guarantee we can remove your negative credit items.”

READ THE REST OF THE ARTICLE HERE:

http://www.mint.com/blog/trends/credit-repair-10042010/

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What the Credit CARD Act (Credit Card Accountability, Responsibility and Disclosure Act of 2009) Means For You

2010-08-26T08:59:00.001-07:00

Restrictions on rates and fees:

This new legislation will put restrictions on credit card companies from increasing rates and fees on existing balances.

If your credit card company raises your interest rates, the newly raised rate will not apply to your preexisting balance, just on new charges.

Avoid getting charged fees by always paying your credit card bills on time, even if you’re only paying the minimum monthly payment or balance.

Keeping the balance below your total credit limit will also help lenders view you more favorably (try to stay under 33% of your total limit).

No immediate changes:

The new law won’t go into effect for nine months.

Meanwhile, banks may still raise interest rates on your existing balances. A smart move now would be to start or continue monitoring your credit so you’re aware of balances and debt as well as fees, rates and interest charges.

Curbing of caps and fees:

The new legislation doesn’t completely cap credit card fees and interest rates.

For example, the regulation doesn’t set limits on the charges that may come with your monthly statement. It does, however, ban late fees if the issuers had delayed crediting the payment.

It also requires banks to give consumers at least 21 days notice when sending bills.

You’ll have more time between a bill’s receipt and its due date, but make sure you stay on top of your bills to avoid late charges.

No more rate raise surprises:

Credit card companies must now alert customers 45 days before interest rate increases.

They’re also required to give notice of significant changes to a card’s terms, so that companies can’t completely alter rewards programs without warning on customers who have been participating for years in a certain rewards program.

Be sure you understand a credit card’s terms before you agree to anything — read all the fine print.

Harder to get credit for some:

Credit card companies will be required, under the legislation, to consider a consumer's ability to pay when issuing credit cards, which could make it harder for some to get credit (but could also protect them from getting in over their heads). It also limits how issuers can offer credit to those under 21 without verification of their ability to pay or parents' permission.

It makes great financial sense to keep aware of how lenders view you as a borrower, so start or continue staying on top of your credit report!

Good stuff!

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Fast Credit Score Fixes - To Get The Best Mortgage Rates !!!

2010-07-21T16:08:00.000-07:00

This article leans heavily on: Personal Finance 101: Know Your Credit Score

Free Credit Score - See yours at CreditReport.com!

With homes at near-bottom prices and mortgage rates at historic lows, a lot of consumers are jockeying to get into the homeowners market or to refinance their standing loan.

But there's one catch:

Getting approved for today's best mortgage products relies mostly on your credit score.

In addition, mortgage lenders are digging deeper than ever into homebuyers' credit reports, studying not only credit-card spending habits but ordinary bill-paying consistency and debt-to-income ratios.

Here is how to quickly and efficiently address the credit issues that mortgage lenders care about the most.

Typically, a credit score of 720 or above is the bar for qualifying for the best mortgage rates.

Many borrowers with lower scores may think there's nothing they can do to improve their situation, especially in the short-term, but that's a myth.

While there's no quick-fix magic to erase glaring blemishes, a borrower -- even with high levels of debt and a history of delinquent payments -- can start improving his or her score in immediate and dramatic ways.

First, it's important to understand that a credit report is a snapshot of your creditworthiness at the one particular moment mortgage lenders pull the report.

Scores can fluctuate a lot because most lenders update the credit bureaus on a monthly basis. But the amount the scores change is a little more complicated and depends on a series of factors, from your amount of available credit to paying your bills on time to the length of your credit history.

As when being photographed for a portrait, you want to look your best when lenders take a picture of your credit profile while still conveying an accurate record.

See your credit score: CLICK HERE

To help you see a bounce in your score and land a step closer to obtaining an affordable home mortgage, AOL Real Estate talked to some financial experts to find out some fast ways for consumers to address a less-than-desirable credit score and to start seeing results:

Tip No. 1: Pull your credit score

Before shopping for a home, you need to know your exact credit score and determine whether any wrong information has affected it.

According to Joel Ohman, a certified financial planner, around one-third of consumers have errors on their credit report and simply by pulling it, you can rectify those mistakes.

Ohman says depending on the flub, this could cause your score to spring 25 to 50 points.

You should see this adjustment reflected in your credit score before you apply for a home loan.

Cunningham advises allowing at least 3 months time to check your credit report before applying for a mortgage.

This allows for the time it takes to deal with the credit bureau, provide documentation, and then to see your score updated.

Consider subscribing to an online credit-score monitoring service for at least six months before you start applying for mortgages.

This will give you a crystal-clear sense of how different actions affect your score and how quickly your repair efforts register.

One big surprise: Large credit-card balances can hurt your credit score temporarily, even if you pay them off on time.

Tip No. 2: Pay down your debt

Before you take on a mortgage, you need to show lenders you can manage credit responsibly.

About 30 percent of your credit score is based on your available credit, which can be figured by taking the total of your credit card balances divided by your total credit card limits.

As you start paying down your debt and continue to do so over time, you are going to see your credit scores bounce.

But if you are saving up for a bigger down payment or to do a cash-in refinance, you may not have the spare dollars to completely wash away your liabilities.

If this is the case, then try to get as close as possible to the recommended level.

Typically experts suggest consumers use 20 percent or less of their available credit.

Tip No. 3: Target credit accounts that matter most to lenders.

Lenders are scrutinizing credit reports more carefully than ever, so it's important to target the accounts they'll be most concerned about.

Major credit cards are by far the most important.

But be sure not to forget about store credit cards, even those you rarely use.

It's easy to forget to pay a bill on a card you only use once in a while, but mortgage lenders will expect them to be up-to-date before moving forward.

Also, expect payments for doctor's fees, utility bills, and home equity lines of credit to be scrutinized, as well.

Tip No. 4: Piggy-back on good credit -- married couples can start anew when buying a home.

Another strategy to enhance your scores is to utilize the good credit of a significant other, a relative, or a very good friend, says Cunningham.

Get added to a credit card as a joint account holder, and as payments continue to be made on time, your credit scores will increase.

For example, if a husband with good credit adds his wife to his account, his history will be imported into her credit file and in effect, raise her score.

Cunningham says another way is to use a secure credit card, a credit line that requires a cash collateral deposit. This means you put a $1,000 in cash down for a credit card and then you can charge up to exactly that amount on the card.

The purpose is to have the issuing lender reward you for using the card and report back to the credit agencies. Just confirm before arranging for the secure card that your lender is going to report your payment history to the credit bureau.

Tip No. 5: Attempt to increase your existing credit limits, but don't open new accounts.

Most mortgage brokers say you should stay financially static during the application process and avoid starting an new credit lines.

But your score can actually benefit from increasing your credit limits, part of the equation that determines your percentage of available credit.

If you have been a responsible owner of a credit card, you may consider asking the issuer if they will raise your credit card limit.

However, this should not be confused with opening new credit cards and lines of credit, which could have an adverse effect on your credit.

"Someone opening five or six credit cards at one time may have a budget problem," says Ohman. "In the short term, it could be seen as a negative."

Opening up credit -- such as applying for multiple credit cards, a car lease, store cards-- around the time you apply for a home loan can compromise your position as a borrower.

Tip No. 6: DO NOT keep paying bills LATE -- especially your mortgage payment.

Forgo the defeatist mentality, because starting to pay your bills on time can start to correct your dismal credit score. About 35 percent of your credit score is based on whether you pay your bills on time. You just have to meet the minimum by the due date.

For those who are already homeowners, paying bills on time also includes your current mortgage payment. Scott Gamm, founder of a money management website, says that bankruptcies and foreclosures can cause your credit score to drop 150 to 200 points and that this discrepancy will be a fixture on your credit report for the next seven to ten years.

Robert's response: "I will NEVER agree that it will take 7 to 10 years for someone to learn to be responsible with their credit...

Think about it...

How long would it take YOU to learn any major lesson? one or two years... (maybe three...) ???

Why does the system require 7 to 10 years for an item to be removed from someone's credit report? People get out of jail after committing major crimes in less time than that.

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Four Myths About Your Credit History

2010-06-25T10:14:00.000-07:00

From Equifax's own: Robin Holland

If you don’t learn how to understand your credit, it will be a lifelong problem.

You most likeley know that you should be checking your credit report at least once a year.

Do you understand what’s included in your credit report and how to read it?

Do you know what your credit score means?

When I work with consumers or lead workshops on financial literacy and credit, I’m always amazed at the misconceptions about credit histories, credit scores, and credit-reporting agencies.

Here are four myths about your credit history that I hear people proclaim frequently as truth:

Myth #1: The credit-reporting agency is responsible for my debt (or credit) rejection.

The credit report is an important part of the decision to grant you credit or not, but it’s not the only one.

Each lender or creditor has a set of criteria it uses to determine whether or not you qualify for that credit.

Think about it: It’s much easier to get a gas card than a credit card or a mortgage.

That’s because the requirements to qualify for a gas card are not as stringent as those for a mortgage.

It’s up to you to establish an on-time payment history and a good mix of credit.

Then when the creditor pulls your credit report, the creditor can look at your history, along with the other information you have provided, to make a decision about whether or not to give you credit.

A lot of the details you may provide, such as your gender, income, and employment history, aren’t on your credit report. But you can take responsibility for your financial identity and make sure the information reported about your credit history will present a positive picture of you to creditors.

Myth #2: The credit-reporting agency put the negative information on my credit file.

A lot of people don’t understand how credit reporting works.

Credit reporting agencies put information in your file when creditors send us details about your payment history.

Credit reporting agencies are not out to get you, and no one pays us to report negative information so they can avoid granting you credit.

We compile the data sent to us about your financial history and present it as a snapshot of your finances.

*** There may be inaccurate information on your credit report (and you should frequently check your file at all three nationwide credit reporting agencies for inaccuracies), and if you find any inaccuracies contact the credit reporting agencies to dispute them.

Myth #3: My credit score is a part of my credit report.

Your credit score is not included with your credit report.

You can access your credit report and credit score from Equifax or one of the other nationwide credit reporting agencies.

Your credit report is a history of how you pay your bills.

It includes your credit accounts—mortgages, student loans, credit cards, and auto loans—and shows if you’ve been late or on time with your payments, the balances on these accounts, and who else has been looking at your credit report.

Your credit score is calculated from a formula based on the components of your credit report.

While the score is a good reflection of you and your financial capabilities, there’s still room for interpretation.

A lender or creditor will look at your score as another element in determining the risk in lending to you or giving you credit.

So you can get your credit score from a credit-reporting agency, but it is not automatically included with your credit report unless you purchase a credit report and score product or subscribe to a credit monitoring service that includes it. (Because like all companies, we need to show a profit).

Myth #4: Credit-reporting agencies make the rules on how your credit history is reported and how long information stays on your credit report.

Nope.

The credit reporting agencies compile and report information about your credit history, but we’re not the decision makers.

A government agency, the Federal Trade Commission (FTC), governs the credit reporting agencies.

The Fair Credit Reporting Act (FCRA) outlines the rules on what credit reporting agencies can and cannot report and how long negative factors stay on your file.

It is helpful for people to understand what a credit reporting agency does and how information gets into their credit report. The more knowledge you have about this and your credit history the more control you will have over your finances.

Robert's comments: This is some good information. As much as I criticize the 3 big credit reporting agencies, we would not have the access to credit that our economy is based on without them.

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Secrets ot the Perfect Credit Score

2010-05-18T06:01:00.000-07:00

Good Credit Scores Are the Key To Financial Health

Credit scores were developed as tools to help banks and businesses make objective decisions. To generate them, a mathematical formula pulls credit report data and transforms it into a numerical rating. Fico Scores range from a low of 300 to a high of 850, and, according to Fair Isaac, the creator of the scoring system, mortgage lenders consider anything above 760 as ideal.

Despite differences in each ranking system, they have one thing in common: A higher score indicates less risk. And having high credit scores makes you more appealing to lenders, employers and landlords.

Consequently, focusing on your credit scores is only natural. "People are drawn to this subject because it allows them to measure something that they equate to financial health," says Jose Rivas, the national education manager for Consumer Credit Counseling Service of San Francisco.

That focus, however, can turn into anxiety, and conflicting information is often to blame.

"One article states that consumers should close their unused accounts," says Rivas, and "another states that consumers should never close their accounts." For this reason, getting the facts from reliable sources is essential.

Keeping the Right Mix of Credit

"Every time someone runs my credit, they say, 'Wow, I almost never see someone with credit that high,'" says Carrie Rocha of Minneapolis, the founder of the “Pocket Your Dollars” blog. She keeps her credit first-rate to preserve her autonomy.

"As someone who got out of $50,000 in debt in less than three years, I take a lot of personal pride in my financial freedom" she says.

Though Rocha has no plans to borrow money again, "I have no barriers when it comes to employment, insurance or other areas of life where my credit score is used to assess the kind of risk I am."

Besides "the obvious things like pay my bills," Rocha says she increased her scores by talking to her credit union loan officer, who said an overabundance of idle retail accounts was driving it down.

She had opened the cards randomly during in-store promotions but never really charged on them, so there was no history to protect. After formally closing the accounts, her scores that were previously in the 720 to 740 mark rose to the 800s.

Does the Perfect Credit Score Exist?

Pursuit of excellence is often wise, but does "perfect" exist? Yes, says Craig Watts, the public affairs director for Fair Isaac. "Several thousand consumers do, in fact, have the highest possible FICO score."

Though most people won't reach the credit score apex, you can get close by consistently following three simple guidelines:

• Pay all bills on time.

• Keep credit card balances low.

• Take on new credit only when you really need it.

Don't obsess over small credit score variations. "Lenders decide what score they will accept for their best-interest-rate product," assures Watts.

"They genuinely don't care if your score is 50 or 100 points higher than that."

Clearly, A-plus credit has its advantages, but there is no reason to go overboard. Find a balance between attentiveness and fixation by understanding what those numbers can do for you and knowing how you can improve them.

And remember: Credit scores gauge your borrowing history, not your value as a person.

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Why Debt Settlement Is The Wrong Move

2010-05-05T19:09:00.000-07:00

Debt settlement a 'nuclear option' that most people shouldn't even consider.

An excellent article by: Alysse Dalessandro

Complaints about debt settlement companies are on the rise - prompting warnings that dealing with those types of businesses might not the simple solution they might seem for consumers overwhelmed by debt.

Only an estimated one in 10 consumers who use these companies successfully emerge from the process, according to a recent government report.

The Better Business Bureau said it received more than 3,500 complaints from consumers on debt settlement companies since late 2007.

"The whole industry is getting a lot of attention right now because so many people are in so much financial trouble and unfortunately if they get tangled up in the wrong debt settlement company, they end up worse than they began," said Alison Southwick, BBB spokeswoman in an interview with Consumer Ally.

The Government Accountability Office recently released an investigation into debt settlement company practices and found that 17 out of 20 companies sampled impose fees on consumers before settling any of their debts - a practice that the Federal Trade Commission has proposed banning.

According to Southwick, how the process works:

1. consumers are told to stop paying their debt and instead pay into an account set up by the company.

2. The consumer pays into the account for years and then after saving a substantial amount, the debt settlement company will try to negotiate with the credit card company to accept the saved amount instead of the full debt owed.

The issue is that the credit card companies or other original creditors DO NOT have to comply with the negotiation and that is only one of the many potential problems Southwick warns.

"The problem is you haven't been paying your credit card for years, your debt is mounting, and your credit report is taking a hit and in the meantime, your credit card company can file a lawsuit with you and start garnishing your wages," Southwick said.

The BBB, a membership-based business ethics group, takes specific issue with companies making claims of debt settlement as a "simple" solution "guaranteed to work," according to Southwick.

GAO found the debt settlement companies provided information to consumers that was "fraudulent, deceptive, or questionable" including advertising success rates of the program as high as 100%, according to the investigation report.

"Debt settlement is not an easy fix and if you are going to do it, you really should only consider it before declaring bankruptcy," she said. "Its really one of those nuclear options that you do not want to enter into lightly."

Once entered into the lengthy debt settlement process, it may not be so easy to leave. Southwick cites a consumer who had paid $15,000 into a debt settlement account. When she dropped out of the process, the company refused to return the money.

According to the GAO, FTC and state investigations have shown that fewer than 10% of those entering into the process complete it.

U.S. Sen. Charles E. Schumer (D- NY) introduced the Debt Settlement Consumer Protection Act, which would require increased disclosure, limit fees charged by debt settlement firms and grant greater enforcement power to state and federal officials to go after companies that are taking advantage of consumers.

The FTC warns consumers should avoid companies that:

* promotes this as a "new government program".

* guarantee their success of making your debt vanish.

* advise you to stop all communication with your creditors.

* say that they can stop debt related collection calls or lawsuits against you.

* require you to pay a full upfront fee.

"You should always contact your credit card company and try to work something out first with them," Southwick suggested.

"For some people, who have a little bit of credit card debt, debt settlement is really not for them."

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Why the Credit Bureaus Can't Get It Right - Part 2

2010-04-07T16:56:00.001-07:00

How Problems Go Global

So suppose there’s a whopper of an error on your credit report - Suppose it says you’re dead.

That’s what Ken Clark, a financial planner in Little Rock, Ark., was told when he tried to buy his wife a minivan. The auto dealer called Clark a con man because his report was marked “deceased.”

When Clark called the credit bureaus to report that he was still breathing, he learned that the real authority on the matter was a Utah bank that issued him a credit card and later reported him dead. To fix the error, Clark had to send a notarized letter and a copy of his utility bill to the bank, which in turn assured the bureaus that he was alive.

Clark’s story sheds light on how the dispute process works.

Credit bureaus say they usually need to check with the lender because 30 percent of disputes are filed by shady credit-repair companies that challenge all the negative information on a consumer’s report, regardless of its validity. Bureaus also have to deal with consumers who pull stunts like concocting official-looking statements on phony letterhead; one bureau says it recently got a letter from “Banke [ed.-this “typo” is intentional, replicating the original] of America.”

To sort the good from the bad, the industry sends almost everything through the automated system e-OSCAR (Electronic Online Solution for Complete and Accurate Reporting), which forwards consumer disputes to lenders for verification.

Here’s where the trouble begins.

Rather than call the lender or send it the consumer’s letter and supporting evidence, the bureaus zap the documents to a data processing center run by a third-party contractor. This system yields considerable savings.

Equifax reduced its per-dispute cost from $4.50 to 50 cents by outsourcing the work to Costa Rica and the Philippines, for example. But consumer advocates say these workers are under enormous pressure to process disputes and forward them to lenders as quickly as possible. While the bureaus say quality is the overriding factor, employees deposed in civil suits describe a harried pace.

One TransUnion manager testified that workers were expected to complete up to 22 cases an hour. An Equifax worker estimated she was allotted four minutes per dispute. To process the letters so rapidly, the workers summarize every complaint with a two-digit code selected from a menu of 26 options.

The code “A3,” for example, stands for “belongs to another individual with a similar name.” The worker can also add a single line of commentary. The two-digit code and short comment is the only information the lender receives about the dispute.

Consumer advocates say these summaries omit the background banks need to understand a complaint, and banks agree. “We’ve met with [the credit bureaus] and said, ‘Look, we need more information,’” says Nessa Feddis, vice president and senior counsel for the American Bankers Association.

But the bureaus say their codes provide accountability and accuracy. “People talking to people? That’s the last thing consumers want,” says Experian’s Maxine Sweet.

She suggests that consumers with complex cases resolve their disputes directly with their lenders. But that can put consumers in a catch-22. Currently, banks have no obligation to investigate a dispute unless it’s forwarded by a credit bureau.

What’s more, consumer attorneys say some lenders do little more than check the disputed information against their own records—even if those records were the source of the error. “It’s a closed loop,” says Michigan lawyer Ian Lyngklip. And some lenders rely on software rather than people to do some of the checking.

Not every dispute sent to a credit bureau gets the e-OSCAR treatment.

Some complaints get extra attention. Experian says it sends disputes to its “special assistance service” department when consumers have “unusual problems” or an elected official requests consideration for a constituent;

Equifax says it handles disputes relating to public figures and court cases with “additional processing procedures.” TransUnion declined to provide details on its VIP service, but its employee manual instructs workers to use “priority processing” if a letter comes from a “judge, senator, congressman, government official, attorney, paralegal, professional athlete, actor, director, member of the media or a celebrity.”

If your case is assigned this status, it may be given to a dedicated rep who will make phone calls on your behalf. But there’s no guarantee of a successful resolution. “I have a lot of cases that go to special services, and they still mess it up,” says Robert Sola, a Portland, Ore., attorney.

Better Times Ahead?

The Consumer Data Industry Association, the trade group, reports that 72 percent of disputes result in an update or correction, suggesting that the e-OSCAR system fixes plenty of errors. However, when the system fails, the consumer has few options.

If he files a second dispute without providing new information, the bureau can dismiss it as “frivolous.” The FTC is supposed to enforce laws requiring the credit bureaus to conduct a “reasonable investigation” into consumer disputes, but it hasn’t taken any action on that front since the start of the decade. (The agency says its recent reviews of consumer complaints yielded no reliable conclusions about report accuracy or the dispute process.)

That leaves the courts. But consumers can’t sue a bureau over an error until they can prove the error is already creating problems. “It’s a system designed to make sure the horse is out of the barn,” says Santa Fe, N.M., attorney Richard Rubin.

And even a successful lawsuit won’t necessarily fix a mistake. Just ask Chino, Calif., marriage counselor Jeff Christensen. In 2003 the cable company Charter apologized to him for reporting a collections account in error and directed the credit bureaus to delete the information.

Experian refused, so Christensen took the bureau to court. In 2005 a judge ruled that Experian was violating the law and fined the company $2,500. Experian paid the fine, but it didn’t correct the error until December 2008—when SmartMoney called—saying it never got the right paperwork.

Turns out, the courts can issue fines, but they can’t demand corrections.

“You have no right to an accurate credit report,” says Lyngklip, the attorney. Consumer advocates estimate that bureaus pay just $25 million a year in court fines—a minor expense for the $7 billion industry.

The credit bureaus say they have no immediate plans to change the dispute process.

They note that turnaround time is at an all-time low, and consumers have embraced a new online dispute-filing feature. “The possibility of errors is at its lowest point ever and continues to decline,” says Equifax’s Klein.

Consumer advocates have their own ideas. They want Congress to amend the Fair Credit Reporting Act so that judges can demand corrections. They’d like the bureaus to establish an appeals process and require proof from lenders who rereport disputed information.

And everyone seems to have their hopes pinned on regulations expected this year that will require lenders to address complaints received directly from consumers. Says Pratt, the trade group president, “That may allow consumers a better route to resolve a stickier dispute.”

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Why the Credit Bureaus Can't Get It Right - Part 1

2010-04-07T16:52:00.000-07:00

A fantastic article submitted by SmartMoney.com

A mistake on your credit report can cost you literally thousands of dollars, especially in this economy. So what can you expect from a big credit bureau if you ask them to investigate and correct the error?

The answer, for many consumers: About 50 cents worth of effort, conducted by offshore workers at third-party firms. That’s just one of the findings from SmartMoney’s investigation into why credit-report errors continue to pop up so frequently—and why consumers often have so much trouble getting them fixed.

To follow what one consumer advocate calls an “electronic hot potato,” SmartMoney pieced together a depiction of the dispute process through information from trial depositions, internal company memos and the bureaus’ own employee manuals—much of which the bureaus and their trade group subsequently confirmed. The process may be efficient, but it remains a mystery to most consumers, and a source of bitterness for some.

The Wrong Kind of Thrills

For Brandon and Amanda Mendelson, it had all the elements of a paperback thriller:

The innocent newlyweds, the mysterious account held by an obscure bank in Boca Raton, the faceless corporation controlling everything behind the scenes.

But when the Mendelsons discovered the strange overdue loan mistakenly listed on Amanda’s credit report, they weren’t exactly thrilled.

The Glens Falls, N.Y., couple had never done business with that bank, and the error spoiled Amanda’s credit history. Making matters worse, their call to a national credit bureau yielded nothing more than a form letter stating that the accuracy of the entry had been “investigated” and “verified.”

Now they can’t help but wonder: investigated how? Verified by whom? Brandon studied organizational leadership in school, but even he can’t imagine how the bureau failed to fix such an obvious mistake. “Maybe it fell through the cracks,” he says.

Or maybe the process worked pretty much as it was designed to.

Although they generally decline to discuss specific cases, the three major credit bureaus—Experian, Equifax and TransUnion—each attest to their commitment to accuracy and accountability in their record keeping.

But while consumers might assume that each bureau employs an army of dedicated sleuths who carefully investigate and correct errors, all the bureaus actually process most disputes using a system that’s almost entirely automated—and where human beings are involved, they’re often working at a harried pace.

The bureaus say the system, dubbed with the Muppety acronym e-OSCAR, is the most efficient way to handle the more than 20,000 disputes a day they receive.

In practice, most complaints are electronically zapped straight to the lender, and according to consumer advocates, many lenders respond by simply rereporting the erroneous data.

Credit-report accuracy is profoundly important now, because an error can wreak more havoc than ever on your financial life.

Before the nation heard the words credit crisis, just about anyone with a pulse could get a loan. Now many banks are refusing credit to anyone who looks remotely risky. And as legions of anxious job hunters know, a growing number of employers routinely check credit reports before they make a hire. It’s no wonder, then, that the National Foundation for Credit Counseling says call volume is up 31 percent in the past 12 months.

“Credit is on consumers’ minds more than ever before,” says Curtis Arnold, CEO of CardRatings.com.

But according to a 2007 survey by pollster Zogby, 37 percent of consumers who obtain their credit reports find errors, and half of those said they could not easily correct the mistakes.

An earlier study by the U.S. Public Interest Research Group, a nonprofit consumer advocacy organization, found that one in four reports contained “serious errors.” For its part, the Consumer Data Industry Association, the industry’s trade group, says only 11 percent of consumers who get their credit report file a dispute and just 5 percent of those challenge the results.

“That’s an excellent satisfaction rate,” says the group’s president, Stuart Pratt. Still, even some industry insiders say there’s a problem. Testifying before Congress, one CEO of an independent Arizona credit bureau likened the dispute process to “having an IRS audit, brain surgery, getting a tooth pulled or going to your own funeral.”

And when the dispute process fails, consumers say they are left feeling powerless. Martha Soto, a 63-year-old Antioch, Calif., shipping manager, says she couldn’t get the mortgage she needed last fall because Experian listed her as the defendant in an unpaid court judgment.

She says she’s faxed records proving that she’s actually the plaintiff; Experian says they’re the wrong records, and the dispute is still unresolved, leaving Soto increasingly frustrated. “They’re defaming you, and you can’t do anything about it,” says Soto. “It’s scary to think an agency like that can control your life.”

Big Business, Little Service

Until the late 1980s, consumer credit records were scattered among thousands of low-profile local bureaus.

The industry gradually underwent a consolidation frenzy that left three companies controlling the data of 210 million Americans. The smallest, Chicago-based TransUnion, is owned by the Pritzker family of the Hyatt hotel fortune and boasts credit-reporting operations in 25 countries, including Nicaragua and Botswana.

Publicly traded Equifax, founded in 1898 by a Tennessee grocer who sold his customers’ payment records to fellow shopkeepers, calls itself a “global leader in information solutions” with businesses as diverse as risk detection and database management. (According to its income statements, its consumer data unit remains its most profitable, boasting a 40 percent pretax profit margin.)

Experian, the largest of the three and based in Ireland, is a $4 billion company that uses consumer data to help businesses send more than 20 billion pieces of junk mail every year.

Together, the three credit bureaus have amassed a spotty record on consumer care.

In 2000 they jointly paid a $2.5 million Federal Trade Commission fine for blocking millions of phone calls from consumers. Three years later Equifax paid a second fine because it still hadn’t hired enough people to answer the phone. In 2005, after new federal laws forced the bureaus to give away credit reports, Experian was hit with a $950,000 FTC fine for marketing those reports through a Web site that automatically charged consumers for an $80 credit-monitoring service. Last year TransUnion agreed to pay $75 million to settle a class-action lawsuit over sales of consumer data for marketing purposes.

The bureaus, which never admitted wrongdoing in these cases, say they realize the importance of providing reliable information to lenders and consumers alike. “If we don’t, we cannot survive, either as a company or as an economy,” says Equifax spokesperson Tim Klein.

But they also admit that credit-report errors can stem from glitches in their own systems. Some mistakes occur thanks to the algorithms used to match loans to individual credit reports. If the name or Social Security number on another person’s account partially matches the data on your file, the computer might attach it to your record.

The credit bureaus also employ contractors who gather tax lien and bankruptcy data from courthouses and government offices.

If these workers transpose a digit or misread a document, their error winds up on your report. But even if they never made mistakes of their own, the bureaus say they can’t possibly patrol the accuracy of the 3.5 billion pieces of account information they receive every month from lenders. “We’re the library,” says Maxine Sweet, Experian’s director of public education. “We don’t write the book.”

Continue to Part 2:

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New Credit Card Regulations Help Homebuyers Easier to Pay Down Debt and Qualify for Better Mortgage Rates

2010-02-13T02:02:00.000-08:00

by Christina Crouch

When Brandon Hill, a 28-year-old marketing specialist based in Salt Lake City, went to buy a house, he got an unfortunate surprise. "I was under the requirement for an FHA loan at the time by about 15 or 20 points," Hill says. "We tried to get the mortgage under my wife's name, but the lender backed out. We needed to get my credit score fixed to buy a house."

Laden with $10,000 in credit card debt between Hill and his wife, Brandon doubled his credit card payments, but still had to enroll with a credit repair service in order to raise his score the 20 points necessary to land a loan. "It was a really long and rough process," says Hill. "[Before credit repair], we felt like our payments weren't going anywhere."

Future homebuyers may not have to go through the Hill's hassle. As of February 22, new provisions from the Credit Card Accountability, Responsibility, and Disclosure Act will go into effect, helping indebted consumers looking to land a mortgage pay off their debt and raise their credit score faster. Here's now the new laws will affect homebuyers.

Those looking to unload some debt before applying for a mortgage are about to get a much-needed helping hand, says Catherine Williams, vice president of financial literacy for Money Management International financial counseling firm in Houston.

"Credit cards that offer an introductory promotional rate have to make that rate last at least six months," explains Williams. "If someone is applying for a mortgage and needs to pay down debt, they'll be able to get a low- or no-interest card and spend the next six months paying off their balance. That could be substantial."

In addition to offering lengthier teaser rates on new cards, Williams adds that the Credit Card Act will also optimize payments for consumers with old balances. When consumers hold cards with multiple interest rates - for example, a five percent rate on the first $3,000 of debt, and 20 percent on anything higher - their monthly payments currently pay off the cheapest debt first, leaving the pricier debt to accrue. Under the new law, payments will eliminate the more expensive debt first, leaving consumers with lower balances, higher credit scores, and a better likelihood of landing sweet mortgage rates.

"It's just going to help everybody get rid of their debt faster," says Williams. "That's going to make their credit score go up."

"The major thing this act will do for mortgagees is help them be more aware of what their debt utilization ratio is and better understand how to lower it," says Curtis Arnold, CEO of the credit card information web site, Cardratings.com. "Now credit card companies are going to have to warn you about what happens if you keep making that minimum payment, and how long it's going to take you to pay off that card."

Arnold adds that to raise their credit score and qualify for the best mortgage rates, consumers need keep their debt to 10 percent or less of their credit limit.

While the new credit laws won't actually pay down your debt for you, they will help consumers keep track of how much they owe by forcing card companies to print the total amount of debt, how long it will take to pay the debt making only minimum payments and how high the payments will be if the consumers wants to pay off the debt with interest within three years on every credit card statement and to give card holders a full three weeks (21) to make their payments.

"As of late February, the only way they can increase your rates is if you're 60 days late on your payment," says Arnold. "That's going to help mortgage seekers financially plan a lot better."

While the card act may help those carrying credit balances destroy debt faster, it's going to block other consumers from getting credit at all, says David Jones, president of the Association of Independent Consumer Credit Counseling Agencies in Fairfax, Virginia. For those planning to purchase a home in the future, this could have severe ramifications.

"People younger than 21 are going to have a lot of trouble establishing credit early on in their careers because they won't be able to get a credit card without a cosigner," Jones explains. "Because card companies won't be able to tack on new fees or target risky consumers, they might offset those costs by lowering credit limits or raising interest rates. That's going to create a tough situation for consumers who may be trying to get a mortgage."

The good news, Jones adds, is that those looking to clean up their credit before applying for a mortgage will be able to plan their finances much better. According to the new law, if a credit issuer does change your interest rate or card terms, cardholders will be given the right to opt out. Those who do opt out of a rate increase will lose the ability to use that card in the future, but will be given 45 days to find a new card, pay off their balance, and cancel their account. Changes in rates and fees will also only affect new balances, so future homeowners needn't worry about their old debts doubling or tripling days before submitting their mortgage application.

"The ability to say 'no' to new charges is going to give consumers who are looking for the best mortgage rates more control over their debt and their credit score," says Arnold. "It's going to help level the playing field. That 'Wild West' mentality that's been out in the credit card world until now is going away. There's a new sheriff in town."

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How The New Credit Score Will Affect You

2010-02-09T06:30:00.000-08:00

Lenders now have a second formula for judging your past, backed by the three giant credit bureaus.

Your VantageScore could look very different from your FICO score.

By Liz Pulliam Weston

The three credit bureaus are touting their new credit-scoring system as a boon for borrowers, easier to understand and more "consistent" than other scoring methods.

Maybe. But VantageScore, which uses the same underlying data about your debts as the FICO score you already know, also poses some serious risks.

Let's be clear: This isn't about making credit easier for the little guy. This is business.

Big business.

Equifax, Experian and TransUnion are private companies that each track your accounts, balances and payment habits.

A credit "score" simply assigns a weight to those factors to produce an indicator of how much risk you show as a borrower.

Fair Isaac's formula (FICO) for scoring is the one lenders like best.

Fico Scores/Reports

Every time an appliance store or car dealership asks one of the credit bureaus for your credit score, the data the bureau has collected about you is sent through the proprietary FICO model.

The lender pays the credit bureau for the score, and the bureau pays FICO for using its formula.

This is quite a lucrative business for Fair Isaac. Credit scoring accounts for 20% of the company's revenues, according to Merrill Lynch analyst Edward Maguire, but 65% of its operating profits.

The bureaus, naturally, want to cut out the middleman.

"They don't like having to pay Fair Isaac for anything,"

said mortgage broker Ginny Ferguson, who teaches credit scoring to her colleagues in the National Association of Mortgage Brokers. "The (credit bureaus) are intent on finding the next area of revenue generation."

The bureaus have tried to break Fair Isaac's stranglehold before, with no success. The VantageScore may be a different story.

Investors certainly think so; they drove Fair Isaac's stock down 6.6% on the day the new scoring system was announced, even though the bureaus hadn't signed up a single lender.

Analyst Maguire rightly called VantageScore "a shot across the bow" of the bureaus and opined that even if the new system didn't replace FICOs, the bureaus could use it as leverage to get Fair Isaac to lower its prices.

We wouldn't have to care about these elephants' battles, except that consumers may be the grass trampled under their feet.

Here are just some of the concerns:

1. Credit score confusion

FICO and VantageScore use two different ranges. The classic FICO scale runs from 300 to 850, while the VantageScore starts at 501 and runs to 990.

The bureaus say the VantageScore range is more "intuitive," because it breaks down like an elementary-school report card:

901-990 equals "A" credit

801-900 equals "B" credit

701-800 equals "C" credit

601-700 equals "D" credit

501-600 equals "F" credit

There will probably be a lot of puzzled borrowers trying to figure out why a number that would qualify them for the best rates and terms under one system - say, a 780 credit score - makes them credit mediocrities under the other system.

2. Consistency

The information in the credit-bureau databases can be wildly different.

You may have accounts reported at one bureau that don't show up at the other two, or you may have successfully disputed an error at two of the bureaus only to have the third refuse to erase the bogus entry.

One of FICO's big selling points for lenders has been the model's consistency.

Even though the bureaus collect and report credit information differently, the same basic FICO model is used at all three to generate comparable scores.

We shouldn't fall for the idea that the new system is superior without more evidence -- so far, VantageScore hasn't been tested head-to-head with FICO.

3. The good, the bad and the ugly -- but mostly the bad

VantageScore is being marketed to lenders as being a better way to separate "good" from "bad" risks including, to quote its Web site, "the ability to classify more bad accounts into the worst-scoring ranges."

Lenders, you see, are often less worried about losing out on good customers than they are about getting stuck with bad ones.

So if a few potentially good risks get wrongly qualified as bad, lenders aren't that worried as long as they avoid the deadbeats.

*** If you happen to be one of those good eggs who's paying higher interest rates or having trouble getting loans, though, you should worry.

Again, the bureaus are quick to say that they haven't tested VantageScore against FICO, so it's unclear whether the upstart actually does sweep more folks into the worst-scoring range.

But the fact that it's one of the bureaus' goals should help you understand the point: this is not about making consumers happier.

4. "Thin" and "Young" credit profiles

One of lenders' beefs about the classic FICO model is that people whose credit histories are "thin" (they have few accounts) or "young" (their oldest account has been established for only a few months or years) can still get pretty high scores.

The lenders grump that these borrowers may pose a greater risk than the scores predict, and that people should have more robust credit files before they reach the top of the FICO pyramid.

Once again, without comparing VantageScore directly to FICO, the bureaus are touting it as a better way to grade people with limited credit histories.

If that means the young or others without "robust" histories get better access to credit to buy homes and build businesses, this could be a good thing. If it means making credit harder to get for those folks, not so much.

5. High switching costs

To say that FICO scores are entrenched in the financial world would be understating the case.

"FICO scores are used by 80% of the 50 largest banks. They're used in 75% of the mortgage loan origination decisions," said Ron Totaro, Fair Isaac's general manager for global scoring solutions. "We're a force because we've been at this for 50 years."

It's not just the lenders that rely on FICO. Most loans today are bundled up and sold to investors, who use the scores to gauge how much risk they're taking with these investments.

Wall Street is comfortable that FICO-scored loans will behave as forecast, Ferguson said, but could be more nervous about the "predictiveness" of a new scoring system.

If lenders begin adopting VantageScores, they might tighten up their underwriting guidelines -- in other words, make credit harder for consumers to get -- while they see how well the loans actually perform.

*** Consumers can stand to reap some benefits from the new score.

For one thing, competition has a way of bringing prices down and forcing companies to improve their products.

But more importantly, the bureaus promise to provide clear guidance about what goes into the scores and how consumers can better their numbers.

How specific that guidance will be remains to be seen, but Kerry Williams, group president of Experian's Credit Services, said that he wants consumers to know exactly how certain actions can affect their scores.

Currently, Fair Isaac offers a FICO "simulator" through the my FICO.com website that can show you how a handful of actions might affect your score.

At the moment we can't buy our own VantageScores, but Experian promises to make them available to consumers in the next few weeks, and the other bureaus say they'll follow suit by the end of the year.

Then we'll have some more information to gauge whether VantageScores really are a better mousetrap -- or just more of the same.

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Collapse In Consumer Credit May Slow Recovery

2009-12-03T14:23:00.000-08:00

Millions seek to repair damaged scores — here’s how to get started:

By: John W. Schoen

Among the many legacies of the housing bust is a widespread collapse of consumer credit. In the space of a few years, bankers have gone from lending to anyone with a pulse to demanding a pristine payment history.

The result is a collapse in consumer credit that shows no signs of easing. In September, the latest figures available, revolving consumer credit fell at an annualized rate of 13.3 percent.

The situation is worsening. In the first half of the year consumer credit was dropping at a rate of just under 10 percent.

No one is suggesting we go back to the reckless days of setting up tables at college orientations to hand out credit lines to freshmen. The credit card industry learned the hard way that when their models break, the results can be painful for all concerned.

But the lending spree has destroyed the credit histories of millions of Americans.

The rules of the consumer credit game suggest it will be years before those failed borrowers are able to dig themselves out of the hole. Until those households get access to credit again, our consumer-driven economy will continue to slog along in low gear.

In the meantime, there are steps consumers can take to get back in the good graces of the financial services industry that helped put them in a hole they find themselves in.

"I am trying to build credit for myself and husband. I have a low credit score, and he has none. We bought a truck and it's under both names, so we are hoping after we pay it off it will help with our credit. He has a repo under his belt and I have a couple of phone bills that I let get too high and couldn't pay them off. So my question is, what can we both do to build and increase our credit scores? We want to buy a house in the future and would like to build our credit so it won't be so hard on us. Any information or ideas that could help?
— Crystal, Amarillo, Texas

There are lots of reasons for financial setbacks, some of which you can’t control. With the “real” unemployment rate pushing 20 percent, job loss is a big one. Health setbacks are another; nearly two out of three personal bankruptcies were the result of out-of-control medical bills.

Letting the phone bill “get too high,” on the other hand, isn’t on the list of uncontrollable setbacks. You can fix that right away.

But it will take more than a few months of prompt payments to get back on track. The formula created for scoring credit doesn’t care why your payment history faltered. Maybe you're one of those people who just can't stick to a budget. Or maybe you happened to have hit a period of bad luck.

The credit algorithm can’t handle that distinction. That’s a pretty big flaw in the “science” of calculating credit ratings.

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5 Ways To Kill Your Credit Scores

2009-11-24T09:22:00.000-08:00

By Liz Pulliam Weston

One of the questions I'm asked most often about credit scores is exactly how much certain actions affect people's scores.

What good is a good credit score?

Until now, the best I could do was say, "It depends." That's because the company that created the leading credit score, the FICO, has been wary about releasing specifics.

Fortunately, that just changed. At my request and for the first time, the company (also known as FICO) has released details about how specific actions, from maxing out a credit card to filing for bankruptcy, can affect people with different credit scores.

I asked the company to compute the results of those actions for two examples: a person with a 780 score, which is an excellent score on the 300-to-850 FICO scale, and someone with a 680 score. The results:

Effect on a 680 score Effect on a 780 score

Maxed-out card
-10 to -30
-25 to -45

30-day late payment
-60 to -80
-90 to -110

Debt settlement
-45 to -65
-105 to -125

Foreclosure
-85 to -105
-140 to -160

Bankruptcy
-130 to -150
-220 to -240

Source: FICO

The results are given in a range because FICO is still a little nervous about revealing too much about its proprietary scoring. But the range is fairly tight, and we can clearly see the disparate impacts of the different actions.

A Guide, Not a Guarantee.

Before we go further, I have to make this clear: Your mileage may vary.

People with the same credit score can have very different credit profiles: more or fewer accounts, a different mix of accounts, a longer or shorter credit history, use of more or less of their available credit, etc.

Because of those differences, the same action -- maxing out a card, say -- can have different effects on people with the same score, depending on the details of their individual credit profiles.

For the sake of this exercise, FICO assumed both people had several active major credit cards as well as a mortgage, a car loan and student loans.

The person with the 780 score:

Has at least 10 credit accounts in total and a 15-year credit history.
Uses 15% to 25% of her credit card limits.
Has no late payments on her credit reports.
Has no collection accounts or other major negatives.
The person with the 680 score:

Has six credit accounts and an eight-year credit history.
Uses 40% to 50% of her credit card limits.
Was 90 days late on an account two years ago.
Was 30 days late on another account one year ago.

Here's what you need to know about each action and the effect it had:

1. Maxing out a credit card

Using 100% of your limit on any credit card puts you at risk of over-limit fees. It also takes a bite out of your credit score.

Our person with the 680 score might lose 10 to 30 points from this one action, while the 780 scorer could shed 25 to 45 points.

The difference points up an important fact: The higher your score, the more points you tend to lose from "bad" actions. That's because the scoring formula is sensitive to any sign you're getting in over your head. Maxing out a credit card is considered one of those signs.

You also should know that it typically doesn't matter to the formula if you carry a balance or pay off that maxed-out card as soon as you get your statement. What's usually reported to the credit bureaus is the balance on your last statement. Even if you pay the debt in full before the due date, the maxed-out card will hurt your score.

2. Skipping a payment

Mailing a payment a few days late normally won't hurt your score, although you may incur late fees and trigger higher interest rates. The big hurt comes when you miss a payment cycle entirely.

A 30-day-late report would shave 60 to 80 points from our lower-scoring person and 90 to 110 points from our higher scorer. In other words, one lapse of attention could plunge the 680-scorer into subprime credit territory, and our 780-scorer could find credit much harder to get and more expensive.

This is why it's so important to set up automatic payments to ensure your bills get paid on time, all the time. With credit cards, you can set up automatic payments that take the minimum payment out of your checking account to ward against a late payment. You can always make a second payment that reduces your debt or pays it off entirely. You can sign up for automatic payments on the Web site of your card issuer.

3. Settling a credit card debt

All the advertisements about "settling your debt for pennies on the dollar" make debt settlement sound like a great solution. But failing to pay what you owe a creditor will take a serious toll on your score.

The 680 scorer would lose 45 to 65 points with this maneuver, while the 780 scorer would shed 105 to 125 points.

Our scenario assumed that our borrowers would miss one payment before settling the debt with their credit card companies. In reality, debt settlement negotiations can drag on much longer, with each missed payment taking another chunk out of your score.

Settling a debt with a collection agency would hurt less, probably much less, because the FICO formula is set up to weigh more heavily what the original creditor says about you than what a collection agency reports. But if our borrowers were settling with a collection agency instead, their scores would be lower to begin with, because they would have collection accounts on their records.

Also, you should know that the amount of debt your creditor "forgives" in a debt settlement solution is typically added to your taxable income. So you may save some money by settling a debt, but you'll give some of it back to Uncle Sam in higher taxes.

4. Losing a property to foreclosure

Foreclosure deals a severe blow to your credit score: 85 to 105 points for our person with the 680 score and 140 to 160 points for the one with the 780 score.

Foreclosures have implications for your future ability to get a mortgage as well. Although your score may start to improve as soon as the house is gone, mortgage lenders may not be willing to extend you another home loan until two to four years have elapsed.

In an attempt to protect their credit, many people attempt short sales, selling their houses for less than what's owed, with the lenders' permission. Unfortunately, these transactions, even if successful, are often reported as settlements. And a settlement, as you've seen, is pretty bad for credit scores.

To lenders, a short sale isn’t quite as bad as a foreclosure, though, and it may be easier to get another mortgage once you’ve rebuilt your credit.

5. Filing for bankruptcy

FICO spokesman Craig Watts once called bankruptcy the nuclear bomb of credit actions. Filing for bankruptcy would shave 130 to 150 points from the 680 score and 220 to 240 points from the 780 score.

This is different from the other black marks, where the higher scorer was still left with better numbers than the lower scorer. In this case, both would wind up near the bottom of the credit barrel. Getting new credit, particularly in the current credit-crunch environment, would be extremely tough.

Sometimes, of course, bankruptcy is the best of bad options. (See "Quiz: Should you file for bankruptcy?") But if you can't pay your bills, you should at least explore the other possibilities: forbearance, credit counseling or even debt settlement.

Finally, if you have any of these five black marks on your record, remember two things: The impact on your score may differ from what's shown above, and regardless of how many points you lost, you can rebuild your FICO score over time.

You can buy your Equifax or TransUnion FICO score from MyFICO.com. (Experian no longer sells FICO scores to consumers, although it continues to sell the scores to lenders.) With paid scores, you'll get specific advice about how to improve your numbers.

myFICO May Sale - Save 20% on FICO scores & credit reports

In general, when you're trying to build a credit score, you should:

1. Pay your bills on time, all the time.

2. Reduce your credit utilization; below 30% is good, below 10% is better.

3. Have a mix of credit on your reports, including installment loans (mortgages, auto loans and personal loans) and revolving accounts (credit cards and lines of credit).

4. Refrain from closing accounts.

5. Apply for new credit sparingly.

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Confessions of a Credit Card Telemarketer

2009-11-17T11:34:00.000-08:00

by Bob Sullivan

What if there were a way to have your credit card debt erased if you lost your job or became disabled? That's the pitch behind debt cancellation, a service offered by many credit card issuers and retailers.

Debt cancellation doesn’t come cheap: it costs between $1 and $2 per $100 balance. A consumer with a $3,000 balance, for example, could pay nearly $60 a month for debt cancellation service.

That might not sound like such a great deal, but thousands of consumers sign up anyway. Why? One telemarketer who sells the service told msnbc.com recently that there’s only one reason: Sellers intentionally confuse cardholders about the programs and their costs.

"I hate flat-out lying to someone, but that's exactly what we do, 150 calls a day," said the telemarketer, who requested anonymity out of fear of losing his job. "I have seen so many people ripped off that I had to attempt to let people know."

He works in tiny Pennington Gap, Va., a small Appalachian town near the Kentucky border that’s been hit hard by the economic downturn. But he works for some of the biggest firms in America. For the past year, the telemarketer has sold debt cancellation for Macy's retail credit cards issued by Citigroup, working for a third-party firm named Aon Integramark, which contracts work to a local firm, the Kavanaugh CallCenter Group. Aon is one of the world's largest insurance firms, with 37,000 employees and 500 offices in more than 120 countries.

"Are you realizing the power of debt cancellation?" the firm asks of banks and retail stores on its Web site. "These programs provide lending customers with new power and control over their finances -- especially in tough times that can affect anyone."

Quietly, a huge industry

Debt cancellation is a large and profitable business for credit card firms and retailers who issued private-label credit cards. In 2003, the Center for Economic Justice estimated that consumers paid $2.5 billion in fees for such programs, but card firms paid only $125 million in benefits. In other words, the issuers kept nearly 95 percent of the premiums paid.

In standard insurance products, firms pay out about 80 percent of the premiums they collect. The enormous margins in debt cancellation are possible because the programs are not considered insurance and are not regulated as insurance products, thanks to a 1986 Circuit Court ruling.

Few financial products are more profitable than unregulated insurance products, and the bonanza that is debt cancellation (sometimes called debt suspension) have led to aggressive sales techniques for the products. Those have been redoubled during uncertain economic times.

Debt cancellation – and its predecessor, credit insurance -- has a soiled reputation. The Internet is littered with complaints from consumers who say they were signed up for the service and billed hundreds of dollars without their consent.

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The Truth About Free Credit Scores

2009-10-29T15:59:00.000-07:00

Though the credit bureaus must give you free annual reports, their important numbers will cost you. Now 3 sites offer free peeks at those scores, but how helpful are they?

If you're curious about your credit scores, you might have tried one of the plethora of Web sites and services that offer some free credit information, then lure you into paying for your scores, usually as part of a credit-monitoring package.
Weird stuff that hurts your credit

Consumers are entitled by law to free credit reports-- which are simply records of your borrowing and repayment history -- but the numerical scores derived from those reports will cost you, in part because credit-reporting agencies aren't required by law to provide them for free to consumers along with the reports.

Now a handful of company Web sites give consumers at least free glimpses at their credit scores. The sites -- Credit.com, Credit Karma and Quizzle -- offer a window into the key factors that go into calculating your scores, what you can do to improve them and how your credit stacks up against other people's. Last week, for example, Credit.com launched free credit report cards that show consumers how they're likely to rate across five credit-scoring models.

All three sites, which have ties to the credit industry, aim to make money through advertising or through fees if users sign up for products offered on the site, such as credit-monitoring services, credit cards or mortgages.

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The New Math of FICO Credit Scores

2009-09-04T11:14:00.000-07:00

Those with small blemishes on their record should benefit from the FICO 08 scoring change, while high-risk borrowers and those who "piggyback" are the likely losers.

Even the most responsible borrowers slip up sometimes.

Maybe a utility bill went unpaid after you moved and the missed payment went into collections. Or perhaps there are unpaid library fines or parking tickets in collections that are hanging onto your credit history and affecting your FICO credit score, which is widely used.

With the newest version of the FICO credit-scoring system, however, minor delinquencies are now overlooked in calculating creditworthiness.

Under the updated scoring model, called FICO 08, small missed payments lingering in collections with original amounts of $100 or less will no longer do damage to your credit score.

Consumers also are less likely to be penalized for any single delinquency if it occurred two or more years ago -- and if their credit history is otherwise unblemished, says FICO (formerly Fair Isaac), which developed the FICO scoring system.

"There's more flexibility with missing a payment," said Careen Foster, the director of global scoring product management for FICO. "If you have a more habitual pattern of paying accounts late . . . you're more likely to get penalized for that."

If a consumer's credit usage is high, that will be more likely to hurt his or her score with FICO 08. But getting close to your credit-card limits -- even if you always pay on time -- is penalized in some way in every FICO score, not only the recent edition, Foster said.

The changes were made to provide lenders with a better risk assessment of borrowers, said John Ulzheimer, the president of consumer education for Credit.com, a consumer education and advocacy site. FICO decided that one small library fine didn't really predict whether a consumer was likely to default, for example.

With the changes, individuals who pose a low credit risk will probably see their scores rise a bit, and those who are high risk could see their scores drop, he adds.

FICO 08 also addresses "piggybacking," a practice used by credit-repair companies to help people improve their scores, Ulzheimer said. In piggybacking, an individual pays to become an authorized user on a stranger's account. The account holder gets paid for allowing the person to be associated with the account, and the new authorized user is able to improve his or her credit score.

"It was a practice to . . . misrepresent what your credit looks like to your bank," Foster said.

FICO 08 aims to single out individuals who are named as authorized sources through deceptive means, Ulzheimer said. Those people won't see their credit scores rise as a result. But the scores of legitimate authorized users will be treated as they always have been.

Credit Restoration Associates recommends that you still need to be proactive about your credit. By being proactive, you can start to work toward a higher score, something that will serve you well every time you apply for a loan.

Some CRA suggestions:

1. Monitor your credit reports and correct errors. Don't just look for negative events on your record; also examine your credit limits to make sure they're accurate. Credit limits that appear lower on the report than they actually are have the potential to hurt your score.

2. Pay bills on time and keep card balances low. Your payment history, and the amount you owe on your accounts as a ratio of the amount of credit you have access to, are important components of your score. FICO 08 is more sensitive to high credit usage, and consumers may see a lower score if their reported balance on one or more cards is near the account's limit.

3. Take on new credit only when you need it. Some credit cards come with great offers, including a percentage off your bill if you sign up at the cash register. If you accept, make sure you're getting a big enough benefit to make it worthwhile -- taking on additional credit could end up dinging your score.

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What is a debt ratio and why should I care about it?

2009-08-31T16:26:00.000-07:00

Your debt ratio is the amount of credit you’ve accumulated on a monthly basis compared to your income.

It’s a critical number if you plan to make any major purchases, such as a home or car, since lenders check your debt ratio to ensure you’re capable of repaying the loan.

Mortgage lenders generally won’t approve your loan if your mortgage payment would exceed 28% of your gross income (before taxes are withheld).

Your total payments -- including all other debts -- should not exceed 36% to qualify for a mortgage.

These debts don’t include food, utilities or taxes.

For these calculations, mortgage lenders look at items like credit card bills, student loans and car loans and how your mortgage would affect your overall ability to pay.

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Bankruptcy: 4 Tales from the Trenches

2009-08-31T16:18:00.000-07:00

One of the scariest aspects of bankruptcy is the fear of the unknown. These real-life stories can help you know what to expect -- before, during and after.

By Sally Herigstad
MSN Money

Bankruptcy can happen fast -- when a person is successfully sued or when unexpected medical expenses run up. Or it can happen in slow motion, when a business fails or long-term unemployment makes it impossible to keep up with bills. No matter how a person gets to the point of considering bankruptcy, the worst thing about it is the unknown.

The biggest bankruptcies ever

What really happens to you when you file for bankruptcy? What do you have to do? How do you survive afterward?

Four real people, Michael, Robert, Robin and Andrew, shared their experiences going through bankruptcy. (Only Robert allowed us to use his real name.)

Robert Nickell, a pharmacist and chairman of the Nickell Group, filed for bankruptcy in 1999, when he was 39. He lost his business, a pharmacy in Manhattan Beach, Calif., after accumulating more than $600,000 in debt then going through a protracted divorce.

Robin, 31, thought she was covered by health insurance when she spent a week in the hospital after a car accident. She was mistaken. She was already in debt from starting a freelance copy-editing business; with the hospital bill, her debts topped $65,000. Then she lost her job. That was the last straw.

Michael practiced medicine in Oregon for 45 years. He filed for bankruptcy at age 72, when he could no longer work and had no savings to fall back on. He was going through a divorce at the time as well. He owed about $50,000 in back taxes, medical bills and business debts.

Andrew, 36, and his wife, Ashley, 35, owned a retail company in Colorado that sold wireless products, telephones and satellites. They had a great run with it, but between a merger and employee theft, they ran up about $300,000 in debt. They filed for joint bankruptcy two years ago.

Some aspects of bankruptcy weren't as bad as they thought they would be. Other aspects were worse. Here's how it went:

The buildup: How did I get here?

Robert, Robin, Michael and Andrew all found themselves sliding into the circumstances that led them to choose bankruptcy.

Michael had barely broken even in his medical practice for years. He had planned to work until he died, but health problems forced him to retire. His phone rang constantly as creditors sought him out. Eventually, he quit answering it. Bills were stacked all over the office; he stopped opening them. He had given up long before he actually filed for bankruptcy.

Robin had been earning $50,000 a year at a dot-com company. One day, she came to work and was handed a box and a paycheck and told, "This is your last day." Robin moved back to her hometown and quickly found a job. She thought she was getting back on top of things, chipping away at her debt.

Then she was hospitalized, which ended her new job. She could put only a little toward the hospital bills. Living on $1,000 per month in unemployment "gave me a whole new way to look at possessions," Robin says. But cutting back wasn't enough to cut it. Within a few months, her debt was turned over to collection agencies.

Robin hated the phone calls the most. Her father advised her to not answer the phone, but even checking messages stressed her out. Most callers were friendly, but a few were ugly. "One in particular really berated me and said, 'Did you think you could spend this money and not pay it off?' It really upset me because I already did feel guilty."

Robert says, "Pre-bankruptcy is one of these very scary things where you can't believe that you got into this mess.

READ THE REST OF THE ARTICLE HERE: http://articles.moneycentral.msn.com

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Bar to Lawyer - You Have Too Many Student Loans To Practice Law

2009-07-08T06:33:00.000-07:00

by: Zac Bissonnette

The New York Times reports on the sad tale of Robert Bowman, a law school graduate whose application for admission to the New York bar was rejected -- because he had too much student loan debt and had a history of missed payments.

He was recommended for approval by the applications review committee but that decision was reversed by a panel of five state appellate judges: "Applicant has not made any substantial payments on the loans," the judges wrote. "Applicant has not presently established the character and general fitness requisite for an attorney and counselor-at-law."

With more than $400,000 in student loans and accumulated interest, the judges apparently felt he had not demonstrated the judgment worthy of practicing law in New York.

While there is a good amount of not entirely unfair righteous indignation over the outcome of this case so far, Mr. Bowman's bizarre borrowing record does raise an eyebrow and, to be honest, you do have to question his judgment. Mr. Bowman had not made a single payment on his student loans in the 26 years since he began taking them out.

The irony of course is that without the ability to practice law, Bowman will have virtually no prayer of getting his financial life in order.

But here's the good news for Sallie Mae: Student loans can't be discharged in bankruptcy, and Social Security benefits can be garnished to make payments on loans that are in default. And the more penalties he racks up, the more money, ultimately, they'll collect.

Mr. Bowman's life may be ruined in every meaningful way, but the party has just begun for the lenders.

CRA - this is such a shame, but an unfortunate reality in the world that we live in. Mr Bowman might need to call Lexington Law Firm
to repair his credit - if not apply for a job.

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How long does credit repair take?

2009-06-02T06:50:00.000-07:00

by Lita Epstein

We've been getting a lot of desperate comments from people who are seeing their credit destroyed as their personal financial lives take a nose dive. Many are losing jobs and others are facing severe medical problems. Some made big bets with investment property in real estate and now face numerous foreclosures. All are probably facing major drops in their credit scores and not able to get new credit in the tight market today.

Without using a professional credit repair company, how long does it take to fix your score, if your score is down dramatically after a credit disaster? The good news is that your most recent history is what impacts your score the greatest, so as these bad debt reports age you will find your score gradually getting better as long as you pay on time starting from today.

I have seen people with bankruptcies get back up to the high 600s within three years. What does that mean in today's credit market? They would probably be able to get credit, but they will likely not get the best credit offers. In order to get the best interest rates you need a score of 760. The next best rates go to people with scores of 700 to 759. People between 650 and 699 can still get credit but they will pay significantly more for it in higher interest rates. Under 650 you probably will find it very difficult, if not impossible, to get credit.

How long will it take to get a clean credit record? Most of the negatives on your credit report will drop off after seven years, but you don't have to wait that long to see an improvement in your score. If you have a clean record of payments on time for three years and you don't apply for more than one or two new cards at that time your score should go above 650. If you want to get that score above 700, you'll need to get your debt levels closer to 10 to 20 percent. Even if you're good, you probably won't reach 700 for at least four years.

Contact CRA if you would like some advice or help with your situation.

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How to Make (or Break) Your Credit Score

2009-05-28T15:12:00.001-07:00

Wise or Foolish?
By Janene Mascarella

If life is simply the sum of your choices, you could say the same about your credit score: everything you do (and more specifically, buy) drives that three-digit number. It's probably obvious to you that smart decisions can send your score soaring and save you money, while bad decisions can drag your score down and leave you digging deep into an empty wallet. So why is it so easy for people to get trapped?

Your credit score is your financial snapshot -- your portrait as a borrower -- but your score isn't set in stone. That's both good and bad, because the choices you make today can shift the number in either direction for the years ahead.

My Not-So-Smooth Move: Closing Two Credit-Card Accounts

Credit Score Direction: Slightly down

When Ralph Garcia, owner of a vacuum-and-sewing store in Redwood City, California, started falling behind on bills and getting slapped with late payments, he was determined to take control. He thought it would be smart to cancel two cards with balances and pay them off over time. But the results weren't positive. "That move lowered my score, because my available credit line went down, and the percentage of debt went up," says Garcia, who has been self-employed for 31 years.

Last year, Garcia's credit score was about 750 ("outstanding"); now it now sits at 691 ("good"). "What I did wasn't a rocket-scientist move, for sure," he says. "I just figured, if I didn't have the cards, I wouldn't use them. I'm just trying to make the payments and get the bills down."

A Credit Lesson Learned

Closed and unused accounts can hurt your score if you're paying off debt, says Ethan Ewing, president of money-management site Bills.com. Ewing suggests rotating the use of one credit card at a time (and paying it off monthly), or setting cards aside, so you're not tempted to use them, but keeping the accounts open. "And if a creditor closes your account, they must notify you 30 days in advance," says Ewing. "Call to ask that they reverse the decision."

To keep cards active, charge a monthly bill, such as your telephone, to a card, and set up an automatic payment or a personal reminder so you don't miss a payment. And never cancel a credit card with a long history, Ewing advises. "The longer you hold a card, the more valuable it is in your credit-score determination."

My Smooth Move: Getting Serious About Timely Payments

Credit Score Direction: Up -- and staying up

Danny Kofke says he and his wife, Tracy, have not done anything drastic to raise their credit scores: they just pay all of their bills on time. As simple as that strategy seems, it came from a conscious decision to secure their financial future. "My credit score is 795 and Tracy's is 813" out of 850, says Kofke, a 33-year-old special-education teacher from Hoschton, Georgia. "Making the conscious decision to pay all of our bills on time has definitely helped us."

Kofke wrote the book on good credit -- literally. The author of a 2007 book called How to Survive (and Perhaps Thrive) On a Teacher's Salary, Kofke says his elevated score is more than an ego boost. "We just refinanced our mortgage, and we qualified for a low interest rate because of our credit scores," he says. Their choices even give them the security to let Tracy be a stay-at-home mom.

Reaping the Rewards of Prompt Payments

"Generally, I think timely payments are the most controllable factor for families today," says Dan Danford, C.E.O. of the Family Investment Center, a commission-free investment-management firm in St. Joseph, Missouri. "There's nothing wrong with borrowing. But your score will get dinged if you borrow too much or foul up the agreed payment schedule."

It's never too late to make a smart move like Kofke did, even if your score isn't sitting pretty. Paying bills on time for as little as one month can raise even a modest credit score by 20 points, Bills.com's Ewing says.

My Not-So-Smooth Move: Ignoring My Debt

Credit Score Direction: Down ... way down

Russ Marshalek makes no bones about it: he killed his credit score by filing for bankruptcy, a desperate move often deemed "credit doomsday." Already in credit-score trouble from financing college plus living expenses, the 26-year-old book publicist from Queens, New York, found himself struggling to keep up with the bills piling up.

For a while, Marshalek ignored the consequences of his debt -- late payment penalties, and intimidating collection phone calls -- and hoped it would all just go away. It didn't, and his delinquencies took a massive toll on his credit score. "When I filed for bankruptcy, my credit score was in the mid-300s -- which is basically about as low as it can go," he jokes, "before creditors begin taking parts of your body and various organs as payment."

Wiping the Slate Clean?

Marshalek knew he was in serious trouble. He faced two wage garnishments at his old job, defaulted on his student-loan payment, and got bullied by a collection agent into a payment he couldn't afford. "I didn't really know how to extricate myself from this tidal wave," he says. A consumer credit-counseling service advised him that bankruptcy was his only option.

A bankruptcy stains your credit report for seven years, says Kelli Grant, a consumer reporter at SmartMoney. But that's not a death sentence. Marshalek's credit score has already hit bottom, Grant says; it can only go up from here. "If you can prove you've been doing good things since filing," Grant says, "creditors are apt to look at your recent positive history."

Marshalek calls his experience harrowing and painful but worthwhile. After filing for bankruptcy last year, he's now paying his bills on time. "Though I'm aware it will take time, now actually achieving and maintaining a high credit score is possible for me."

My Smooth Move: Diversifying My Credit

Credit Score Direction: Up, then a dip

Six months ago, Dawn Allcot's free credit-score monitoring service offered tips on raising her score. She learned that she lacked "diverse" credit, like store cards and personal loans. Her credit score was good (over 620), but she wanted it higher.

"Kohl's is one of my favorite stores, so I opened a card," says Allcot, 35, a freelance writer from West Islip, New York. "I use it to take advantage of sales that require a charge card and pay it off immediately -- sometimes right in the store."

The move raised her score about 50 points. "The perks offered with the cards save me money," she says. "So far -- it's been six months -- I haven't had a problem. I never charge more than I can pay off."

Minor Ups and Downs

To raise your credit score, it's important to have a healthy mix of loans and credit cards, says SmartMoney's Grant. The one move to be cautious about is opening a lot of accounts in a short period of time: issuers tend to see a move like that as a bigger risk. In fact, that very strategy made Allcot's credit score dip. But she should see her score bounce up again quickly, Grant says, once she's established a good credit history with these new accounts.

Generally, if you use money wisely and pay off debts according to an agreed-upon schedule, as Allcot does, then your rating will be good. "It's tough for most families to make a go on cash alone, and lenders understand that. They just want some assurance that you've borrowed and paid back in the past," says Danford. "A few blemishes aren't the end of the world."

Excellent advice!

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Keeping ID Thieves at Bay

2009-04-21T11:42:00.000-07:00

Identity theft can be both frustrating and costly for the victims. Reporter Stacey Vanek-Smith visits one couple who is still trying to put their credit back together after eight years of identity theft.

Susan and David Litchfield in their home in Norwell, Mass.

by Tess Vigeland

One thing I'm confident no one imagined in the buildup to a culture of borrowers is that one day a stranger would be able to convince debt issuers that they are you, with a simple computer keystroke.

The wide availability of credit has made it easy for thieves to perfect the criminal art of identity theft.

And that means you could be on the hook for bank loans, car loans and credit cards you don't even own.

ID theft costs businesses, banks and consumers more than $50 billion a year.

Once your credit is destroyed, fixing it comes at a high price of its own. Stacey Vanek-Smith reports.

--------------------------------------------------------------------------------
Stacey Vanek-Smith: David Litchfield is a metal fabricator in Norwell, Mass. David Leighton is a repairman in Florida. They've never met, but they know a whole lot about each other.

Eight years ago a man named David Leighton started using David Litchfield's social security number.

David Litchfield: He got a whole pile of credit cards. He'd use one, maxed it out and then go to another one.

Litchfield and his wife, Susan, didn't discover the problem until months later, when their daughter's student loan was refused.

By then, they were sitting on thousands of dollars in overdue bills and David's credit score was in ruins. It took more than two years to repair David's credit. But it looked like the identity thief had been stopped until...

Susan Litchfield: We went to refinance the house and the bank called me. And I just started crying and I said, don't tell me he's done it again? And he goes, "Oh Sue it's a mess. Wait until you see it."

Susan Litchfield produces a stack of settlement offers, collection notices and credit reports, all linked to David Leighton. He had racked up more than $200,000 in debt, and it was all there, on the Litchfield's credit report.

Susan Litchfield: Credit cards, Capital One, Chase, student loans. He had a $98,000 debt for, what we believe was child support.

ID thieves often strike the same victim more than once says Jay Foley, Executive Director of the ID Theft Resource Center. He says ID theft is hard to prove, the cases almost never got to court and the criminals know this.

Jay Foley: At the same time that we're dealing with issue A and B. The bad guys over here are creating E, F and G for us.

The Litchfield's have put a stop on their credit, but they're worried David Leighton might be sitting on a stockpile credit cards tied to their accounts -- cards he got back when credit was easy.

In the meantime, they're still trying to clean up their credit score.

And that can be an epic undertaking, says Foley, of the ID Theft Resource Center. He says every company where a fraudulent purchase was made has to be contacted via certified mail, each one has to call off its collections agency, ask the credit bureaus to remove the black mark, and open its accounts to police. Companies often push back so they don't have to cover the damages. Foley says victims should prepare for a fight.

Foley: Well they can expect to be grilled repeatedly, and if there's anything that you say during that process that is ambiguous, they are going to jump on that as the excuse for holding you responsible for the account.

Foley says it usually takes between six months and two years to correct problems on a credit report.

Susan Litchfield says the mess is so big this time, she and her husband have basically given up.

Susan Litchfield: They just bounce you around until, after an hour of waiting on the phone, you just hang up. Then I get into bed, my head's spinning, I want to cry, I just get so angry. I got to the point where my blood pressure was sky-high, my doctor was afraid I was going to have a stroke. I just put it all away. I just couldn't deal with it.

The credit bureaus don't make things any easier, says Bob Sullivan, author of "Your Evil Twin: Behind the ID Theft Epidemic." He says the three agencies that determine your credit score have no incentive to move quickly.

Bob Sullivan: The credit bureaus have one customer and one customer only, and it's not us - It's the banks. It's the people who lend money.

And lenders are in no rush to see your credit score improve -- the lower your score, the more they can charge you to borrow.

The Litchfields have seen the interest rates on their credit cards jump and the premium rise for their homeowner's insurance. And now David's credit score is so low, he can't even get a card on his own.

David Litchfield: I have a credit card I share with my daughter. Somehow she got me a credit card. It has my name on it but it, but it's hers and mine.

About ten million Americans have their identities stolen every year. But there are ways to minimize the damage says Lucy Duni. She's with TransUnion, one of the three major credit agencies.

Lucy Duni: Place a fraud alert on your credit report. You could also place a credit freeze, so no new accounts can be opened in your name.

Duni recommends being stingy with your social security number and shredding personal documents. ID theft is getting harder, thanks in part to the credit crisis, which has made banks put stricter lending standards in place, says author Bob Sullivan. He blames the era of easy credit for the ID theft boom. He says banks were more than happy to hand out plastic to almost anyone, with very little verification.

Sullivan: A couple of years ago, you could walk into a Circuit City and walk out with a $3,000 television set five minutes later, even if you had nothing in your pockets. That's the reality of where we were and we created this system that made things very easy for identity thieves.

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What You Need to Know About Credit Scores Part 5

2009-03-16T20:59:00.001-07:00

5. Inquiries = 10%

Each inquiry will take points off of your score. Multiple inquiries for a mortgage within 45 days will only count as one inquiry (the fact that you’re “shopping around” is a given). Likewise, multiple inquiries for a car loan within 45 days will count as only one inquiry. FYI: Only the first 10 inquiries count each year. Inquiries for a job, insurance or utilities, an account review, a promotion (pre-approval offers in the mail), or your own personal review won’t affect your credit score.

Facing the Consequences:

When it comes to mortgages, car loans, and credit cards, what you don’t know can certainly hurt you. Your score is a reflection of your actions: choose the behavior, choose the consequence. According to the Gallant Group, a diversified investment and financing firm:

· 30 days late on a payment can damage your credit score by at least 50 or more points;
· 60 or 90 days late, or a 30-day late payment on multiple accounts can drop your score by 100+ points;
· Balances more than 40% of your credit limit affects your score by as much as 100 points;
· If multiple credit cards are maxed out or approaching maximum balances, your credit score will be diminished by at least 80+ points.

Every financial choice you make can affect your credit score, says Clark. If you keep your credit report healthy and cared for, says Clark, you’ll have nothing to worry about come scoring time.

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What You Need to Know About Credit Scores Part 4

2009-03-16T20:51:00.001-07:00

3. Credit History = 15%

How long have you been credit worthy? If you have a long history of making payments as agreed, it will help your credit score. But this can also hurt older people. By closing old accounts, you are removing all those years of payment history from the credit-scoring model, which is why experts urge you keep accounts you’ve managed efficiently open. FYI: One thing lenders had done in the past with younger borrowers is to have the parents add the child as an “authorized user” on to a credit card account they have had for 20 years. This immediately upped the credit score of the child because he/she had “inherited” a long credit history. However, within the past year, credit bureaus began ignoring any “authorized user” accounts when figuring out a borrower’s credit score.

4. Mix of Accounts = 10%

Ideally, the credit bureaus like to see a mortgage, an auto loan, and three to five credit cards. For a borrower, if you have a Home Equity Line of Credit (HELOC), it will be treated as a revolving account unless it is greater than $40,000. FYI: If it is greater than $40,000, it will be considered a mortgage.

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What You Need to Know About Credit Scores Part 3

2009-03-16T20:44:00.000-07:00

1. Payment History = 35%

Are you paying your bills as agreed? The most recent six months have the greatest impact on your score. The highest weight is placed on the highest payment. Usually, this is your mortgage, next would be a car payment, followed by student loan or credit card payments. Bankruptcies, judgments, liens, and collections/charge-offs will negatively impact your score, as will late payments. FYI: The severity of the delinquency is determined by the amount, how much time has passed, and the number of times you were late on an account. It could be 30, 60, or 90 days late.

2. Balances Carried = 30%

This is the actual dollar amounts you owe on various accounts in relation to how much credit you have available. You want this ratio as low as possible. Keep in mind, mortgages and installment loans are not factored into this as much because they are not really a credit line. FYI: If you’re thinking of applying for a home loan, don’t pay off collections or judgments prior to qualifying. By paying off the collection, you are, in effect, starting the collection process all over again; accordingly, your score will take a big hit. Pay off the collection at closing. Once you have the loan, you can handle a few months of a lower score.

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What You Need to Know About Credit Scores Part 2

2009-03-16T20:30:00.000-07:00

Learning the Lingo

The terms “credit score,” “credit rating,” and “FICO score” are often used interchangeably, explains financial expert Ethan Ewing, president of Bills.com in San Mateo, Calif. “This is basically correct. FICO simply refers to Fair Isaac Corporation, the company that originally developed a ‘score’ method of rating consumers’ credit histories.”

Today, the three major reporting agencies (Experian, Equifax, and TransUnion) each report their own credit scores. There’s the Plus Score, calculated by Experian; the Empirica Score, offered through TransUnion; and Equifax’s Beacon Score. And though lenders use different factors to rate your overall credit worthiness, says Ewing, “it basically comes down to whether you pay -- and pay on time -- and whether creditors have reason to believe you might be overextending yourself.” The more responsible you are with credit, the higher your score will be.

Factoring the Formula

While you won’t be quizzed on this later, you can earn some real-life “extra credit” (and lower payments) by studying the factors that drive your credit score. Doug deBruyn, a Seattle-area loan originator and certified mortgage planning specialist with VanDyk Mortgage, teaches a credit-scoring class for realtors and consumers, and shares his smarts to help you pass your next nerve-wracking credit test with flying colors. Sorry, there’s no “cramming” come loan-time.

Click through the next slides to brush up on the five key components that factor into your credit score:

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What You Need to Know About Credit Scores Part 1

2009-03-16T20:21:00.000-07:00

By Janene Mascarella

Nothing sends fear through the heart of a child more than report card day. Prepare yourself for a sense of déjà vu when applying for a loan ... many say the situation ignites that same blast-from-the past feeling as they await their financial fate. And what to do if, ultimately, that application is stamped "denied”? Figure that your credit score had a lot to do with it, and start making big changes.

Now is the time to get savvy about your finances and credit standing -- being clueless about any aspect of your credit health can really cost you.

Slam-Dunking Your Credit Smarts

Quite simply, your credit score summarizes your credit risk based on a snapshot of your credit standing at a particular point in time. It isn’t so much a grade, it’s more like a grade point average, explains Ken Clark, a debt/credit expert, certified financial planner, and author of 'The Complete Idiot's Guide to Getting Out of Debt.' Think of it as an overall assessment of your financial responsibility, one that influences the amount of credit available to you and the conditions you may have to agree to in order to get that credit.

One major misconception, Clark says, is that people often confuse credit report with credit score. “A credit report is an objective history of who you’ve been as a borrower -- it passes no judgment,” says Clark. “The credit score is a subjective evaluation of that history.” Whether it’s a credit card, car loan, or mortgage, lenders want to know your level of risk, and how likely it is they’ll get paid on time.

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Common MoneyMistakes Part 3

2009-02-25T07:38:00.000-08:00

7. Staying Debt-Free

In a topsy-turvy economy, you may be tempted to avoid all debt like the plague. It's a good idea in theory, but if you don't have a dime of debt to your name, lenders have no way to gauge whether you'll be a reliable borrower. "It's a double-edged sword," Levin explains. "The good news is, you can sleep at night. The bad news is, when you're trying to get something that requires credit and you have a thin file, they really can't find much of a history."

A sizable chunk of your score reflects your ability to handle a few types of credit (such as mortgages or revolving credit). No debt means no track record -- and that could cause your score to suffer.

8. Crossing Your Fingers

You don't want to find out about a flaw in your credit report when you're bidding on a new house or negotiating with a car dealer. So be proactive: Once a year you may request a free copy of your report from AnnualCreditReport.com, which is sanctioned by the Federal Trade Commission.

Should you need access to your credit reports at other times throughout the year (if you're about to make a home purchase, for instance), you can always request the three-in-one credit report from Equifax
, for a small fee. Comb through it to make sure there are no glaring errors, and be extra-vigilant if you have a common family name. "John Smith III could have creditors that show up on John Smith II's credit report," Davis cautions. If you spot anything fishy, file a dispute form immediately and keep a written record of it. After all, you've worked hard to ensure the best credit score possible -- and it's up to you to make sure your prudence is paying off.

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Common MoneyMistakes Part 2

2009-02-25T07:31:00.000-08:00

4. Not Sweating the Small Stuff

Cassandra Hubbart, AOL

If you're juggling several sources of debt -- and these days, who isn't? -- experts will tell you to chip away at high-interest accounts first. But realize that everything from unpaid parking tickets to library fines can wind up on your credit report. "Look out for smaller bills that you may have overlooked," Davis cautions. She recommends extra vigilance after a move; a few leftover pennies on your utility bill may haunt your credit report for years.

If you're having trouble keeping up with payments, resist the urge to stash your past-due notices at the bottom of a drawer. Instead, contact your lender and ask for a little lenience. "The truth is, more lenders are willing to be flexible right now," Levin says. "But you're never going to know unless you talk to them. The worst thing they can say is no, so don't be afraid to call and ask."

5. Consolidating Your Loans

Merging your debts might make it easier to keep track of bills, and it could help you avoid astronomical interest rates. But lumping all of your loans together can also reduce your debt ratio if you're not careful.

Arnold offers this example: Say you have three credit cards, each with a $3,000 balance; if you transfer those balances to a zero-interest card with a $10,000 credit line, you're suddenly using a whopping 90 percent of the credit on the new account. "You've got great intentions, but it could tank your score potentially," Arnold says. You may also be hit with hefty interest rates after the card's introductory period ends, which will increase the amount you owe. But consolidating isn't always a bad idea -- if you do your research and find a good rate, you could save thousands in interest, and that might offset any resultant blip in your credit score.

6. Charging Everything

With credit cards offering attractive rewards programs, it may be tempting to put every purchase on plastic. But even if you pay your balance in full every month, racking up too much debt can wreck your score -- you'll get points for paying on time, but your credit report will show a consistently high balance.

"If you have an unusually large balance, it may not be a bad idea to pay early just to keep it as low as possible," explains Levin. There's also a scary side note to your spending. Some credit card companies track where customers shop and penalize them for purchases that could signal financial difficulties.

Swipe your card at a red-flagged establishment -- such as a discount store, auto repair shop, even a marriage counselor -- and your creditor may lop your credit line or hike up rates. "Whether it's right or wrong, fair or not fair, that's the way it is," Levin advises.

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Common Money Mistakes Part 1

2009-02-25T07:21:00.000-08:00

By Kara Wahlgren

As the ongoing credit crunch forces lenders to tighten their wallets, your credit score has become more important than ever. In short, you currently need a stellar score to secure the lowest interest rates.

"Credit impacts every element of your life," says Adam Levin, co-founder and chairman of Credit.com, a consumer advocacy website. "The stronger your credit, the easier it is to get the things you want."

So it's no surprise that consumers are looking for simple ways to boost their score -- but credit scoring can be counterintuitive, and some seemingly smart financial strategies can actually damage your score.

Read on:

1. Closing Your Old Accounts

After whittling your credit card balance down to zero, closing the account may seem like the responsible (and liberating!) next step. "I think anyone with common sense would view that as being financially prudent, especially if that line of credit is a source of temptation for you," says Curtis Arnold, founder of CardRatings.com, a website that evaluates credit cards.

But Arnold warns that shutting down an account will affect two major components of your score -- your credit history and your utilization ratio, which weighs the amount of credit you have against the amount you’re using.

Instead of closing the account, set up the card to auto-pay one small bill (like your cell phone plan) and deduct the balance from your checking account each month. You won’t have to worry about maintaining the account, but you’ll reap the benefits of a low balance and a long-running history.

2. Putting Your Cards On Ice

Freezing your credit card or burying it in the backyard is such age-old advice, it’s practically a cliché. But letting your account go stale isn’t a smart solution. If your account goes dormant, the company may stop reporting it to the credit bureaus -- or they could shut it down completely.

Not only will your credit history be impacted, but an account that’s been closed by the creditor carries more stigma than an account that’s been closed by the consumer, according to Clarky Davis, the "Debt Diva" at CareOne Counseling, a credit counseling and debt management service in Columbia, MD. Again, the simplest solution is to set up an automatic monthly payment to keep the account active and maintain your credit history.

3. Going on a Credit Bender

Opening new credit card accounts may seem like a good way to rack up more available credit, but every time a potential lender looks at your credit score, it counts as an inquiry -- and stays on your report for two years.

Too many inquiries could hint that you're planning to open up several new lines of credit. "If you appear to be going on a credit binge, that will scare creditors," Levin says. But what if you're shopping around for a mortgage or car loan and simply want to find the best rate? No worries -- as long as you finish your applications within 30 days, your score won't be affected.

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Eight Ways To Raise Your Credit Score

2009-01-29T18:41:00.000-08:00

By Christina Couch

In an age of slashed credit limits, tighter credit card restrictions, and anxious lenders, having strong credit is more important than ever. According to Experian, one of the country's largest credit scoring agencies, the national average credit score sits at 692; however, Linda Call, vice president of the Richmond, Virginia - based mortgage brokerage firm, Berkley Mortgage, says that in today's market, those even slightly below average could be in trouble. "With the economy so down, 620 is the minimum for getting a loan, but people really need credit score around 700, preferably 720, to get something with decent rates," Call says. "It's very scary right now for anyone with a low credit score."

Here are eight ways to give your credit score an extra boost.

1. Keep the Balances Balanced

In a tough economic climate, keeping your credit balance under the limit isn't enough. According to Scott Scredon, director of public relations for the Consumer Credit Counseling Service of Greater Atlanta, GA, simply maintaining a balance that's close to your limit could weigh down your credit score.

"If you carry a balance on your credit card, you need to make sure the difference between your credit limit and your balance is 50 percent or less, so if your limit is $1,000, you need to keep your balance at $500 or less," says Scredon. "Not using all of your credit is a signal to card companies that you're managing your credit properly." Scredon adds that keeping an even lower balance -- 30 percent or less -- will boost your score even more. Should your balance go over the 50 percent mark on one card, Scredon recommends focusing any available financial resources on cutting the balance down, even if it means sacrificing a few daily luxuries until the credit's in check.

2. Eliminate the Mistakes

One of the fastest ways to up your score is to make sure it's yours. According to a 2005 study by the Federal Trade Commission, an estimated 8.3 million Americans are victims of identity theft each year. Of those victims, 1.8 million have new credit cards, loans, or financial accounts opened in their name without their knowledge.

An easy way to prevent paying off debts you didn't incur is to keep tabs on your credit score.

3. Diversify Your Credit

"People don't realize that 10 percent of your credit score is determined by what types of credit you use," says Gail Cunningham, marketing director for the National Foundation for Credit Counseling. "That's determined not only by how you manage revolving debt like Visa, MasterCard, and store credit cards, but also how you handle fixed payments like your car payments or your mortgage payments over time."

Instead of putting long-term purchases on cards, Cunningham recommends taking out short-term one to two-year loans in order to build a diversified credit portfolio. In addition to receiving lower interest rates and more flexible payment terms, consumers who use loans over cards also build positive credit and gain better credit terms in the future.

4. In With the Old, Out With the New

Another 15 percent of your credit score is determined by how long you've been managing credit. Those who can manage cards wisely by paying on time and keeping balances lower than limits can improve their credit score by getting plastic early. It's up to you to figure out when the time is right.

"It's to your advantage to get a credit card as early as possible and start building credit early," says Call, "but you have to do that when you're ready. People who start building credit in their early 20s will have a significant advantage when it comes time to apply for a home mortgage." Though college students are statistically poor at managing plastic -- the average college student graduates with nearly $2,200 in credit card debt according to Nellie Mae -- learning the basics of credit early can benefit in the long run.

5. Add Some Positives

Consumers in dire credit straits may be able to boost their score simply by showing credit scoring services what they're doing right. "If the consumer has positive histories in things like rent and utilities, adding those histories can greatly help the credit score," says Mark Guimond, executive director of the American Association of Debt Management Organizations.

"There are companies designed to get positive information on your credit score and that can have a significant impact," he says. Organizations like Credit Restoration Associates in Richmond Virginia can help consumers add daycare, insurance, rent, and cable credit histories to their score and set up online bill pay services to make sure those debts keep getting paid on time.

6. Flex Your Negotiation Muscle

If you see trouble on the horizon, nip it in the bud, says Scredon. "Making a late payment could affect your interest rate, not just on the card you're paying late on, but on all your credit cards," he explains. "If you know you're going to have trouble making payments, get in touch with your lender and have a discussion about it. We are hearing more and more from our counselors that lenders are willing to look at whether you can put together a different payment plan." Since even one late payment could lower your credit score, preventing disaster before it happens can protect your credit for years to come.

7. Prioritize the Debt

Those who are already in the plastic trap can begin digging themselves out by creating a debt attack plan. Start by making a list of all of your credit debts, then pick out which is harming you the most.

"If you have a card where you owe more than 30 percent of your credit limit, power pay that one down first to keep your credit score in tact," recommends Cunningham. "After that, I tell people to pay off their largest debts first unless it's just too daunting. If so, tackle your smallest bill first while making minimum payments on everything else, and once you've paid it and have that sense of accomplishment, move on to the next one."

By focusing your financial resources on eliminating one problem debt at a time, Cunningham says consumers can eliminate long-term out-of-control debt from impacting their credit score.

8. Research the Bargains

Credit inquiries are a major obstacle that prevents consumers from comparing loan rates and terms. While inquiries on your credit report can lower your score -- as much as five points according to Lendingtree.com -- consumers have a 30-day window before choosing their loan when all mortgage and auto loan inquiries only count once.

An easy way to avoid racking up inquiries on your account, says Guimond, is to comparison shop as much as possible before filling out a formal application. "Don't just apply to ten different lenders, talk to lenders, talk to customer service people, get as much information as possible," he says. "It pays to do the research."
CRA never charges for good credit advice.

Christina Couch is a freelance writer based in Richmond, Virginia, and Chicago, Illinois. Her writing credentials include AOL.com, MSN.com, Yahoo! Finance, and MSN/Encarta Online. She is also the author of "Virginia Colleges 101: The Ultimate Guide for Students of All Ages" (Palari Publishing, 2008). She can be contacted at couchcs@gmail.com.

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Identifying a Legitimate Credit Repair Firm

2009-01-21T08:18:00.000-08:00

Text originally from the Better Business Bureau of Chicago and Northern Illinois:

Due to the troubling economic situation, many consumers seek out credit repair or debt settlement companies- here is what you need to know about them and how to determine their legitimacy.

1. These services cannot ask for money in advance.

2. They cannot automatically get legitimate negative reports off your credit report.

3. Be extremely cautious about a service that recommends you not pay your creditors so it can negotiate with them for you. This could negatively affect your credit report. A service should never guarantee that they can cut your debt by a specific percentage.

It is against federal law — the Credit Repair Organizations Act — for any credit repair company to charge you in advance for their services. The only time they can ask for payment is after all of the services they were to do for you are completed.

A credit repair company cannot tell you that they can get negative (but legitimate) items off of your credit report. The main aspect of credit repair organizations' work is writing to the credit reporting agencies to dispute the items on your report by asking for their validation.

If the items on your report are real, such as liens, bankruptcies, etc, the credit reporting agencies will not have a problem validating them. Also, keep in mind that disputing items on your credit report is something you can do by yourself, for free (although it is very time consuming). You can easily find the appropriate dispute letter templates on the internet

Many debt settlement or negotiation companies request that you don't pay your creditors and wait until you are behind in payments so that they can contact your creditors and attempt to negotiate to have your debt reduced in exchange for making a payment on the spot.

While some creditors may agree to this to get at least partial payment, your credit rating will suffer, your interest rates may go up, and you may have trouble obtaining future loans or financing.

Debt settlement or debt negotiation companies should not guarantee that by enrolling in their services, they can cut your debt by any specific percentage, such as "40-60 percent".

At CRA, we do not believe that debt negotiation is a way to go. It will destroy your credit rating. Many of our clients have used services such as this before enrolling in our program, and it is very difficult (but not impossible) to repair their credit.

Please call us for a free professional credit consultation. We can answer any questions about debt negotiation companies at that time - 1-800-671-1454.

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CRA Exclusive: 10 Ways To Help You Beat a Credit Hangover

2009-01-12T21:46:00.000-08:00

It’s economic Armageddon. House prices are cratering, banks are begging for spare change, and it seems everywhere you turn someone is in need of a rescue plan -- including you. With the incoming bills from this past holiday season's charge-fest, you're starting to get buyer's remorse, big time.

Don't panic, we have 10 ways to help you beat a credit hangover.

Credit Hangover Tip No. 1:

Don't Panic

First, calm down and stop hyperventilating. According to Lesley A. Hoenig, a bankruptcy attorney licensed in Michigan, Illinois, and Minnesota, realizing that your debt problem is not the end of the world is extremely important. “You will make it out of this situation one way or another,” says Hoenig. “What's imperative is to make a definitive list of all the debts you owe.” She explains that doing this will help to ensure that everything debt-wise can be dealt with properly, which should help you breath a lot easier, thus avoiding a credit-induced aneurism down the road.

Credit Hangover Tip No. 2:

Pay Off High-Interest Debts First

It's always a good idea to pay off the debt with the highest interest rate first, advises Hoenig. “The higher the interest rate, the more interest that will accrue. With an APR of 30 percent it takes only three years before you wind up paying more than twice what you originally owed.” Determine which credit cards or debts are costing you the most interest, and work double-time at paying them off first. Remember, the two-fisted monster of compound interest works in your favor when you’re saving money, not when you’re borrowing it.

Read the rest of the article at:
http://www.walletpop.com/credit/experian/10-ways-to-beat-a-credit-hangover

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5 Credit Repair Tips

2009-01-02T05:22:00.000-08:00

by David Wada

1) if you have a credit score of 677, you are in the same situation as 70% of all Americans. If your credit score rose just 30 points, your family can save, on average, $421 every month or $5,052 every year on house payments, car payments, credits cards, loans, etc.

2) A lot of people ask whether credit repair really works. The simple answer to that is, “Yes, absolutely.” Millions of items have been removed from credit reports, and tens of thousands get deleted every single day (i.e. late payments, collections, bankruptcies, and foreclosures get deleted). A study released by the U.S. Public Interest Research Group in June 2004 found that 79% of the consumer credit reports surveyed contained some kind of error or mistake.

3) Although there are many credit repair companies out there…use caution and avoid being scammed. The Fair Credit Reporting Act guarantees any customer the credit repair process.

4) Also, the credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. Unless they give you a written contract that spells out your rights and obligations, assume you are being scammed.

5) Read all documents, and before signing anything.

Know that a credit repair company cannot:

* Mislead you with false claims about their services.

* Charge you unless their promised services is completed.

* Perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.

Be sure the contract specifies:

* Payment terms for services and total cost.

* A description of the services down to the itty-bitty details the company will be performing.

* How long it will take to achieve the result.

* 100% guarantees the company offers.

* Company title, phone number and business address.

Call today for a free credit analysis!

At Credit Restoration Associates, we pride ourselves on providing the highest quality of credit repair service, while maintaining the ethics and integrity required. By strictly adhering to the standards and practices outlined by the Federal Trade Commission we can offer our clients the very best service and still provide Low Cost solutions.

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The CRA Credit Restoration System

2008-12-13T13:07:00.000-08:00

CRA has always delivered premium credit resoration services.

Our process involves both systematically disputing innacurate or obsolete information from a client's credit file and educating the client in the responsible uses of credit.

While we are having any errors in your credit report removed, we will work with you on your core credit problems. By the end of the program, our goal is for you to achieve "true credit literacy."

We will find out who you owe, how much you owe and when the payments are due.

We will also help you get organized, we will work with you to develop a budget, and then we will teach you how to maintain your good credit over the long term.

The CRA Credit Restoration System is designed to not only improve the immediate outlook of your credit profile, it is also to teach you the key ingredients in building, developing, and most importantly maintaining positive credit over the long term.

To realistically develop a quality credit profile over the long term, we must create habits of behavior that mirror those who have excellent credit.

We can not fix people, but we feel we can encourage, direct, and educate our clients, so they have the proper “road map” to follow when our service is finished.

The only long term solution once our repair process is finished is for our clients to apply these habits of true credit literacy into their daily lives.

We are not just credit experts, we are credit teachers.

We look forward to helping you!

At Credit Restoration Associates, we pride ourselves on providing the highest quality of credit repair service, while maintaining the ethics and integrity required. By strictly adhering to the standards and practices outlined by the Federal Trade Commission we can offer our clients the very best service and still provide Low Cost solutions.

Get more information today by visiting our website.

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Avoiding Scams in Credit Repair

2008-12-06T10:16:00.000-08:00

Following is a list of things to aviod while researching credit repair companies. This list is proudly brought to you by Credit Restoration Associates:

The Credit Repair Professional

The credit repair business requires a clear grasp of the interaction of many factors. Credit bureaus, creditors, and collectors are each regulated under their own set of federal laws. There are state laws that may supercede the federal laws. In the background of all of this activity is Fair Isaac and Company that formulates your FICO Score based on the makeup of the information on your report. Credit repair professionals must have a working knowledge of all of these factors and more.

And the Not-So-Professional

True credit repair professionals provide an incredibly valuable service. But there are also those that misrepresent themselves and the services they offer. These deceptive practices will waste your money, and in some cases leave you worse off than ever. Here is our list of the top offences…

Authorized User Alert

Some so-called credit repair companies have been brokering "authorized user" status on credit card accounts. This involves making the customer an authorized user on someone else's credit card to boost the customers FICO score. This is not illegal, but you should be aware that Fair Isaac and Company, in response to this practice, has eliminated authorized user benefits from the new FICO scoring model. According to Fair Isaac, one of the three credit bureaus will begin using the new scoring model in September 2007. The other two credit bureaus will adopt the new model by mid-2008.

The New Identity Trap

There is a busy little credit repair sub-culture that offers to help you establish a new identity by applying for an Employer Identification Number (EIN) which they suggest that you use in place of your Social Security Number. This amazes us! And it is a serious crime that could put you in prison. Steer clear.

Promises Promises

Watch out for companies that guarantee results such as a specific increase in your credit scores in a specific period of time. Professional, reputable credit repair companies can produce dramatic results! But given the fact that there is no way to predict the responsiveness of the credit bureaus, creditors, or collectors it is inappropriate to make such promises, and a sure sign of bad business.

The One-Dimensional Credit Repair Problem

Beware of credit repair companies that offer credit bureau disputes, and nothing more. They are most likely using software that simply pumps out dispute letters - repeatedly. This one dimensional approach to credit repair is certain to produce disappointment. Effective credit repair requires the skill to challenge the bureaus, creditors, and collectors alike; all with the knowledge and understanding of the legislation that governs them, and a grasp of how each change in your report can affect your FICO scores.

Power Corrupts

I’m going to stray a bit from the category of credit repair scams and touch on two of the more egregious offenders in the credit reporting industry. Many people mistake size for honesty. Power can corrupt, and the journey to the dark side is often led by corporate attorneys who constantly test the limits of consumer’s tolerance. Credit repair can be tricky enough, but getting hoodwinked by the credit bureaus can be downright discouraging. Here are offenders that we encounter on a daily basis.

False Credit

Every day untold numbers of consumers go to TransUnion's "True Credit" website and pay for what they believe to be their credit scores. What they get are deceptively named "TrueCredit" scores which vary significantly from the FICO scores used by lenders. Here is the (almost impossible to find) small print from the TransUnion website. "TrueCredit is not connected in any way with Fair, Isaac and Company; the credit score provided here is not a so-called FICO score. The credit scores of TransUnion may not be identical in every respect to any consumer credit scores produced by any other company."

Not a Free Credit Report

Are you starting your credit repair effort? You can get all three of your credit reports for free, one time per year, from AnnualCreditR Don’t be fooled by Experian's website! Here is the fine print: "When you order your free report here, you will begin your free trial membership in Triple AdvantageSM Credit Monitoring. If you don't cancel your membership within the 30-day trial period, you will be billed $12.95 for each month that you continue your membership." And it may not be so easy to cancel. The Office of the Attorney General of Florida lists the following issues in their investigation of Experian: "Deceptive advertising, misleading domain name, and failure to honor cancellations in violation of Chapter 501, Part II, Florida Statutes (Florida Deceptive and Unfair Trade Practices Act)."

Get more information from a reputable credit repair firm. Contact Credit Restoration Associates at 1-800-671-1454 or visit their website at http://www.CreditRA.com

Free Credit Repair Tips to Raise Your FICO Scores

2008-12-03T10:30:00.000-08:00

Good advice from Blog Talk Radio:

Your FICO score is the same as your credit score (FICO is short for Fair Isaac Corporation). Your score is based on information about you from companies that gave you credit in the past. In this article, we provide some free tips for people with low FICO scores.

The first challenge is to determine if your credit score is considered low. FICO scores range from 300 to a perfect 850. Anything under 700 could stand a some improvement. After all, your credit score determines how high an interest you'll pay on your loans, credit card balances, and your home mortgage. The higher your fico score, the lower the interest rates you'll be offered.

Free Credit Repair Tip #1.

Monitor your credit report. You can get a free copy of your credit report every 12 months (go to annualcreditreport.com). But since there are three major credit reporting bureaus (Experian, TransUnion, and Equifax), if you request a report from one of them every four months, you will be able to monitor your reports over the course of a full year. The purpose of monitoring your credit reports is to look for any inaccurate information and then work with the credit bureaus to get it removed.

Free Credit Repair Tip #2.

Pay down, but not off, your credit balances. Your FICO score will improve as you start paying down any large balances on your credit cards and other debts. But here's the tip: do not pay off the entire balance. Leave a relatively low balance to demonstrate to potential new lenders that you can handle credit in a responsible way.

Free Credit Repair Tip #3.

Secured credit cards can help. If your FICO score is too low, you probably have trouble getting a credit card. There is a type of card, called a secured credit card, that you can obtain - for a price. Secured credit cards typically require a cash deposit. For example, if you put $500 in your secured account, you can charge up to $500. So, why not just spend the cash? The answer is that using the secured credit card will raise your credit limit, and help your credit rating. But shop around for the best deal - some secured cards have high fees.

Free Credit Repair Tip #4.

Get a sub-prime merchandise card. If the question is "how can I raise my high credit limit," then sub-prime merchandise cards may be the answer. These are nothing more than a card attached to a line of credit that allows you to buy merchandise from a specific vendor. You're required to put down a deposit on whatever you purchase, and the remaining balance is financed on the card. This new line of credit is reported to the credit bureaus, and your credit score will reflect this good news.

Free Credit Repair Tip #5.

Try the "piggyback" method. If you are a married woman with a low FICO score and your husband has good credit, read on. You can leverage his credit with the piggyback method. It lets you build credit in your own name, and at a much faster pace than if you had to build it all by yourself. Have your husband add you as an "authorized user" or "secondary account holder" to his account. You may find his entire account history gets posted to your credit report. However, the creators of the FICO score have announced they are changing the way their scored models treat "authorized users," so don't expect miracles.

If you take the time and effort to apply some of these free tips, you will be rewarded with better credit, and a more comfortable lifestyle.

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Now is the Time for Credit Repair

2008-11-25T13:19:00.000-08:00

This is an excellent article by James W. Kemish. It inspires excellence in the credit repair professional. With CRA, you can be assured that you will have professionals of the highest level working for you. Call today for more information 1-800-671-1454 or go right to the website by clicking HERE:

The quality of your credit has never been as important as it is today. Lenders have tightened their guidelines and interest rates are now determined by new Risk-Based Pricing models; the lower your credit score, the higher your rate, and every single point can make a difference. People everywhere are turning to credit repair professionals to help them clean up their credit reports and optimize their credit scores.

The Importance of Professional Help

There is a good reason that so many people are reaching out for credit repair help. There was a time when it was enough if you paid your bills on schedule. Those days are over. The advent of the complicated FICO credit scoring model has made a science of credit score optimization, while the complexity of the credit reporting system has made it more difficult than ever to identify and correct errors.

How to Find the True Credit Repair Pro

Credit repair is no longer a simple matter of spotting an error on your credit report and disputing it with the offending credit bureau. A working knowledge of the Fair Credit Reporting Act is a bare minimum requirement, while your credit score is dependent on many subtle factors, most of which have nothing to do with your ability to make your payments on time. It’s a new world and the right help can make all the difference. Here are the essential qualifications to look for in a credit repair professional.

Knowledge of the Laws

A credit repair professional has an intimate knowledge of the laws that govern all of the participants in the credit reporting system. The credit bureaus are bound by the Fair Credit Reporting Act, collectors are governed by the Fair Debt Collection Practices Act, and state statutes of limitation will contribute significantly to the negotiability of collections.

Familiarity with Lender Remedies

Truly effective credit repair often must look beyond the credit bureaus and include lender cures and rehabilitation opportunities. Many lenders offer attractive programs that can get you back on track and even eliminate bad marks from your credit report. The credit repair professional will be able to guide you through the process of approaching creditors about these opportunities as appropriate. This multi-dimensional approach will insure that you get the best possible results.

An Understanding of the FICO Scoring Model

There are many variables involved in the process of credit score optimization, and everything matters; payment history, account balances and usage, age of accounts, account types and even the mix of accounts. A credit repair professional has in-depth knowledge of the FICO scoring model and will provide you with everything you need to know to manage the content of your credit report, strike the proper balance, and get the most out of your credit score.

Help With Rebuilding Credit

It is not unusual, after a period of financial stress, to have little or no open credit. Your credit scores are based on both the positive and the negative information on your credit reports. Effective credit repair must address both parts of the equation simultaneously. To focus only on removing erroneous derogatory information from your credit report will leave half of your credit repair potential untapped. A credit repair professional will help you rebuild your credit and manage your new debt for the best possible credit score results.

Putting it All Together

The genuine credit repair professional will address all aspects of your credit to insure that you get the best possible results. Everything necessary will be done to clean up your credit reports, improve your credit scores, rebuild your credit, and make you as lender-ready as you can be. In selecting a credit repair service make sure that their program covers every base. And trust yourself. Pick up the phone and interview your prospective choices before signing up. Write down a list of questions and ask away. Your credit is too important not to take the time to make the right choice. Good luck!

Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.

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Protecting Your Credit Score During the Holidays

2008-11-14T07:25:00.000-08:00

With the holiday shopping season about to kick off, it’s important to understand your financial situation before heading to the stores so that you can create a sensible budget. By shopping smartly, you can take steps to make sure your credit score doesn’t suffer for the sake of the season. That way you can remain merry long after the holidays are over.

Shop Smart

There are a number of steps you can take while shopping this season to protect your credit score during the holiday rush. First, it’s a good idea to set boundaries. If your score is lower than you would like — or even if you want to maintain it — it’s important not to spend outside your means. A good rule of thumb is to try to keep your credit card balances well below 35% of your total credit limits. If you know it’s hard for you to resist buying just "one more thing," try paying with cash. That way, you’ll be more likely to stay within the budget you set. And, as appealing as it can be to save 15% on your holiday purchases, it’s best to avoid retail credit card offers. Opening too many lines of credit can negatively impact your credit score and could ultimately cost you more than you’d save.

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What bad credit really costs you Part 1

2008-11-13T13:53:00.001-08:00

It's not just a number

Failing to take steps to improve your credit score could cost you hundreds or thousands of extra dollars on a home loan, a car payment or a credit card or insurance bill.

Sure, you know your credit score can affect everything from whether you qualify for a mortgage to whether an employer hires you, but have you ever made a plan to consciously improve your score? If not, it can be costing you dearly.

"When it comes to mortgages, auto lending and credit cards, the higher your score, the lower the interest rate you're going to pay," says Barry Paperno, manager of customer service for credit-scoring company Fair Isaac, which created the widely used FICO credit score. So the time and effort it takes to improve your credit score could save you hundreds of thousands of dollars over the course of your lifetime.

Loans and scores

For most people, a mortgage loan is where they'll reap the greatest rewards from an improved credit score.

"For the past two or three years, mortgages have been the lowest in 30 or 40 years, but that doesn't apply to everybody," says Janette E. Jones, mortgage consultant for American Home Mortgage in Bethesda, Md. "That applies to people who have excellent credit. Someone who has excellent credit can actually get a fixed-rate loan for 5.5%. However, for people who have less-than-excellent credit -- and I would say that's anything below 650 (on the FICO scale of 300 to 850) -- they're looking at an interest rate that's 1% higher, at the bare minimum."

By Tamara E. Holmes, Bankrate.com

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What bad credit really costs you Part 2

2008-11-13T13:45:00.000-08:00

While the median FICO score in the United States is 723, which would yield favorable loan conditions, for those whose score falls way below that mark, the ramifications are costly.

A median of 723 means half the people fall below that score and half have scores higher. More specifically, here's a breakdown of how scores are distributed across the population, according to MyFICO:

Breaking down the numbers: % of population and their score:

2% - 300-499

15% - 650-699

5% - 500-549

18% - 700-749

8% - 550-599

27% - 750-799

12% - 600-649

13% - over 800

According to MyFICO, a division of Fair Isaac, a consumer with a FICO score between 720 and 850 might get a 5.922% rate on a $200,000 30-year fixed mortgage rate. That would give him a payment of $1,189 a month and $228,072 in interest over the life of the loan. A consumer with a FICO score between 675 and 699 might get a 6.584% on the same loan, which would cost him $1,275 a month, with $259,074 in interest over the life of the loan, or $31,002 more.

The consumer with a FICO score between 620 and 674 might get a 7.734% rate and pay $1,431 per month, costing him $315,021 in interest over the life of the loan. That's $55,947 more than the middle-score borrower and $86,949 more than the borrower with excellent credit.

Worse yet, a consumer with a score between 560 and 619 might get an 8.531% rate, pay $1,542 per month and pay $355,200 in interest over the life of the loan. The difference in interest paid over the life of the loan between the first and last example is more than $127,000.

If at first you don't succeed

While the dollar amounts are most striking when it comes to primary mortgages, the effects of lower credit scores are not limited to your purchase of a home. If you want to refinance and pull out some cash to finish your basement or pay off some credit-card bills, your credit score can not only determine your interest rate, but it can also dictate how much of your equity you can cash out. The higher your credit score, the higher the amount you'll be able to pull out. "Someone with a credit score of 580 might only be able to receive 70% of the equity in their home while someone with a 600 might be able to take out more," says Jones.

Likewise, if you want to take out a home-equity loan of $20,000, your credit score could cost you thousands of dollars. According to MyFICO, a consumer with a score between 720 and 850 might qualify for a rate of 7.911% and pay $190 a month and $14,219 over the course of the loan. For that same $20,000, a consumer with a credit score between 640 and 659 might qualify for a rate of 9.486% and pay $209 per month and $17,562 over the course of the loan.

Auto loans can be just as costly for people with lower credit scores. For a $20,000, 48-month auto loan, MyFICO calculates that a consumer with a score between 720 and 850 might qualify for a 6.282% rate and pay $472 per month. That same consumer would pay $2,670 in interest over the four years of the loan. A consumer with a FICO score between 660 and 689 might qualify for an 8.844% rate and pay $496 per month and $3,819 in interest over the course of the loan. That same car cost the second borrower an extra $1,149 -- $23.94 a month -- just because of a lower credit score.

By Tamara E. Holmes, Bankrate.com

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What bad credit really costs you Part 3

2008-11-13T13:16:00.000-08:00

The insurance factor

A low credit score can also cost you more when it comes to your auto and home insurance.

Someone with a credit score of approximately 650 or higher could receive a discount of anywhere from "a few percent to 15% or even more" says Robert Hartwig, chief economist for the Insurance Information Institute.

Insurers use credit scores as one of the factors in determining what's known as an insurance score.

"We're not looking to see whether you're worthy for credit; we're trying to find the elements in the credit profile that correlate with loss behavior for insurance," says Hartwig.

Numerous studies have found that people with lower credit ratings file more claims. There are some theories as to why this is so. "Individuals who have credit problems may well be more likely to defer important maintenance on their cars and their homes," Hartwig suggests. "So those bald tires don't get replaced, the brakes don't get fixed, the leaky roof doesn't get repaired and so on and so forth."

The impact of credit scores on insurance scores varies from insurer to insurer and state to state. Some insurers only use insurance scores for screening new customers, while others routinely check the credit of existing policyholders when it's time to renew their policies. But consumers can improve their chances of qualifying for a lower premium rate by keeping their credit score in the mid-600s or above, Hartwig says.

No one wants to throw away money. But by failing to take steps to improve your credit score, you could be giving up thousands of dollars a year. The best way to improve a blemished credit rating is to pay your bills on time and keep debt to a minimum, says Paperno.

"Everyone should work hard to maintain a strong credit rating," says Hartwig. "If you work hard, you build a good credit rating and if you maintain it over time it has many, many benefits."

By Tamara E. Holmes, Bankrate.com

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Mistakes Do Happen: Credit Report Errors Mean Consumers Lose

2008-11-11T11:48:00.001-08:00

U.S. PIRG Reports

Executive Summary:

The most valuable thing we have is our good name. As consumers, the most common reflection of our reputation as someone who pays bills on time, is trustworthy and financially sound is our credit report. Unfortunately, the information contained in our credit reports, which are bought and sold daily to nearly anyone who requests and pays for them, does not always tell a true story.

Credit bureaus collect and compile information about consumer creditworthiness from banks and other creditors and from public record sources such as lawsuits, tax liens and legal judgements. The three major credit bureaus -- Experian (formerly TRW), Equifax, and Trans Union -- maintain files on nearly 90 percent of all American adults. Those files are routinely sold to credit grantors, landlords, employers, insurance companies, and many others interested in the credit record of a consumer, often (legally) without the consumer's knowledge or permission.

Conversely, consumers rarely check their credit record until after they've been denied or otherwise encountered a problem. Throughout the 1990s, credit report errors have been a serious problem that several states and Congress have addressed.

This is the PIRGs' sixth study on credit report accuracy and privacy issues since 1991. The PIRGs have also participated in state and federal legislative battles to improve credit reporting laws. This report is our first investigation of credit report accuracy since 1996 Congressional changes to the federal Fair Credit Reporting Act (FCRA), designed to improve the accuracy and ease of access to reports, took effect in September 1997.

The findings of Mistakes Can Happen are troubling. An alarming number of credit reports contain serious errors that could cause the denial of credit, a loan, or even a job. Further, some consumers never even received their reports, even after repeated calls.

Among the major credit report accuracy findings of the survey:

Twenty-nine percent (29%) of the credit reports contained serious errors - false delinquencies or accounts that did not belong to the consumer - that could result in the denial of credit;

Forty-one percent (41%) of the credit reports contained personal demographic identifying information that was misspelled, long-outdated, belonged to a stranger, or was otherwise incorrect;

Twenty percent (20%) of the credit reports were missing major credit, loan, mortgage, or other consumer accounts that demonstrate the creditworthiness of the consumer;

Twenty-six percent (26%) of the credit reports contained credit accounts that had been closed by the consumer but incorrectly remained listed as open;

Altogether, 70% of the credit reports contained either serious errors or other mistakes of some kind.

Among the survey's major access to credit report findings:

Of the consumers that did obtain their credit reports, at least 14% of them were forced to call back 3 or more times after receiving busy signals or had to write a letter in order to receive their report; And 12% of the consumers waited two weeks or longer to receive their report once they finished requesting it. It took more than a month for one California man to receive his report.

Overall, 15% of consumers who attempted to participate in the survey either made at least 3 phone calls and never got through or requested their reports but never received them.

Although credit reports contain vitally important information about most consumers, the accuracy of those reports is far from guaranteed. While credit bureaus and creditors have gone to great lengths to ensure that they have the right to collect and compile monstrous lists of information about most of us, mistakes in credit reports do happen, and more often than credit bureaus and, also, banks and department stores (who are often responsible for the mistakes) would like us to think.

Until policymakers and credit bureaus do what it takes to allow consumers to have free and easy access to their credit reports and set tougher standards to prevent and clean-up mistakes, too many credit reports will remain a ticking timebomb of dangerously inaccurate information. And our good names will continue to be at risk, as we pay the price for mistakes made by credit bureaus and other data dealers.

Despite major improvements to the law made by Congress and several states in the last several years, PIRG recommends the following actions:

Improved access to credit reports be granted to consumers. Each national credit bureau should annually and automatically mail a copy of each consumer's report.

Increased duties to ensure accuracy and avoid errors be imposed on banks, department stores and other firms that furnish information to credit bureaus, and that immunity restrictions on consumers' ability to sue these furnishers be repealed.

That the Federal Trade Commission investigate credit bureau compliance with new provisions requiring easier access to credit bureau personnel, especially during normal business hours.

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Credit Repair Tip - Secured Credit Cards For Overnight Results

2008-11-01T07:30:00.000-07:00

Credit repair companies are spread throughout the country – filled with ideas, tips and techniques about how the consumer can rebuild their credit, and repair bad credit history. Yet, one of the most powerful tools that can be used in credit repair is in the hands of the consumer.

Secured credit card are the easy way to create positive credit history. A secured credit card requires - at the beginning of the account - a deposit that will be deposited into a trust. After a specific period of time such as when the credit rating of the consumer improves, or when the account is closed and unsecured credit is opened this amount is given to the consumer or applied to the debt. This deposit which is given to the company is often equal to, or less than the credit limit desired upon the card. Throughout the time in which the deposit is held, consumer get rewarded by the interest gaining and benefits the credit card company as it acts as security for the credit line.

Secured credit cards have many benefits, such as being reported to major credit bureaus on a monthly basis, this way credit fixing can begin immediately, within a month of signing up for the card! This is only one of the reasons - among others - that a credit card is beneficial. Secured credit cards come with all of the conveniences enjoyed with traditional credit cards. As long as monthly payments are maintained, they can increase credit ratings substantially.

Credit fixing is essential to anyone who has had bad credit in the past. Credit is essential to obtain financing on a home or a vehicle, for example, and many other purchases that make life easier. Is not it time that you signed up for a secured credit card and took the road to better credit?

In conclusion, by repairing your credit you get just benefits if you do it right, specialized advise it is always recommendable, just make sure you are dealing with the best credit repair company you can find: Check out Credit Restoration Associates at http://www.CreditRA.com

Operation Clean Sweep

2008-10-28T05:38:00.000-07:00

Source Article from FTC Website:

The Federal Trade Commission (FTC) is reacting to thousands of complaints across the country by consumers about credit repair companies. As a result, the FTC (along with 24 state agencies in 22 states) launched Operation Clean Sweep.

The FTC is charging 33 companies with violating the FTC Act and the Credit Repair Organizations Act (CROA). The FTC states that these companies made false claims they could remove accurate information from their credit reports. The agency also alleged that the defendants violated the CROA by charging an advance fee for credit repair services.

Here is the list of 33 companies that are being charged with violating the CROA.

Advantage Credit Repair, LLC
Nationwide Credit Services, Inc.
Clean Credit Report Services, Inc.
Successful Credit Service Corporation
Hargrave & Associates Financial Solutions
American Credit Experts
RCA Credit Services, LLC
Good Credit Company
Payneless Credit Repair, LLC
Lee Harrison Credit Restoration
Sherrye Mance and Tiffany Morris
Absolute/Advanced Credit Services
Credit Advisors
Executive Financial Credit Services
Federal Debt Relief Systems
Financial Link Services
7 Steps to a 720 Credit Score - NOT THE 720 CREDIT GURU!!!
Integrity Credit Fix, Inc.
My Purchase Power, LLC
Enterprise Technology Group, Inc. doing business as Ameritrust Financial Card
New Leaf Associates, LLC
Financial Freedom Resources, Inc.
American Credit
Credit Counseling of the First Coast
United Credit Adjusters, Inc.
i3 Solutions
Warren and Associates
Bigger & Better Business Solutions
Affordable Computer Mobile Repair
Clean Credit Report Services, Inc.
Life Changing Credit Repair Services
The Credit Physician
Creditmax Financial, LLC

Operation Clean Sweep also includes three FTC cases announced earlier this year: Home Buyers Consulting Network, Inc., Payneless Credit Repair, LLC, and Lee Harrison Credit Restoration.

How can you avoid turning credit repair into credit despair? Here are a few suggestions from the FTC:

Avoid any company that wants you to pay for credit repair services before they provide any services. It is against the law.

Avoid any credit repair company that will not tell you your legal rights and what you can do, yourself, for free.

Avoid any credit repair company that tells you not to contact a credit reporting company directly.

Avoid any credit repair company that advises you to dispute all of the information in your credit report.

Avoid any company that suggests creating a 'new' credit identity - and then, a new credit report - by applying for an Employer Identification Number to use instead of your Social Security number. That is against the law.

If you follow illegal advice and commit fraud, you also may be subject to prosecution.

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3 Tips to Choose the Best Credit Repair Service

2008-10-26T15:30:00.000-07:00

By Link Robertson

Many credit repair services make it sound as if all you have to do is pay them and your credit report will be fixed. However this is not true, below is a criteria you should use when choosing a service.

Do Not Pay Large Fees

Many services will charge large upfront fees. Instead look for more standard rates such as $179 for a start up fee and then a monthly fee of $100 or less. Some services will charge per action, I do not suggest this as your fees can add up quickly to more than $100 / month.

Also you should avoid a company that says you must make a large upfront payment, these companies are typically not effective services and are looking to make a quick buck at your expense.

Look For Refunds Not Guarantees

Credit repair can not be guaranteed, esspecially upfront. This is similar to a defense attorney guaranteeing that you will be found innocent of a criminal charge - IT CAN NOT BE DONE

I strongly suggest you avoid any service that make a guarantee, instead look for a refund policy or warranty. Many good services will offer a refund if their service is ineffective or you are not satisfied.

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2008-10-24T20:31:00.000-07:00

How to Order Credit Reports:

If you have been denied credit, goods, benefits, services or employment within the last 60 days, are unemployed seeking employment, have a fraud alert, or on public assistance, you can obtain a copy of your credit profile by contacting the credit reporting agencies directly by phone.

The telephone number for Equifax is (800) 685-1111.
The telephone number for Experian is (888) 397-3742.
The telephone number for Trans Union is (800) 916-8800.

When you dial these numbers, you will be prompted to enter your social security number and other personal idenifiers. If the system accepts your request based upon the above exemptions, you will receive the respective credit profile within three to five business days.

Alternately - and if you are denied under the above exemptions - you can go online to http://www.AnnualCreditReport.com and order your credit report. This request is a truly free credit report if you have not obtained a copy throgh the central source within the last 365 days.

Either way, please be sure to order all three credit reports each and every time you wish to review your file. Although most creditors report to all three credit reporting agencies, some local or regional creditors and collection agencies may report to only one or two. Ordering all three credit reports will allow a true and accurate review of the history reported at Equifax, Experian and Trans Union.

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2008-10-24T20:18:00.000-07:00

About Credit Restoration Associates:

Credit Restoration Associates is a credit service organization specializing in the restoration of consumer credit worthiness and identity theft. We assist consumers in achieving a favorable financial credit profile. Everything we do is legal utilizing laws enacted by Congress to dispute negative, erroneous, obsolete, and/or fraudulent information contained within your consumer credit profile.

Utilizing the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Fair Credit Billing Act, and the Fair and Accurate Credit Transactions Act, Credit Restoration Associates will assist a consumer in the submission of disputes electronically, verbally and in writing to the Equifax, Experian and Trans Union consumer reporting agencies in addtion to creditors, collection agencies and third-party record providers. Keep in mind that anything we do, you can do yourself. Where Credit Restoration Associates has the edge is the fact we possess the knowledge and a proven method which yields results.

Unlike most credit service organizations that submit the same written dispute letters monthly, Credit Restoration Associates has devised a strategy whereby disputes are submitted verbally, electronically and in writing over a six month period to credit reporting agencies, creditors, collectors, and third-party record providers reporting negative, inaccurate and/or erroneous information. Utilizing the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Fair Credit Billing Act, the Fair and Accurate Credit Transactions Act, in addition to laws applicable to a particular state, Credit Restoration Associates has obtained thousands of deletions and updates for its clients. Credit Restoration Consultants can help remove erroneous and/or inaccurate judgments, liens, bankruptcies, student loans, inquiries, derogatory tradelines, personal identifiers and more! The credit restoration process can take anywhere from 30 days to six months. Most clients see dramatic results in 45-60 days.

Credit restoration is as legal as pleading "not guilty" in a court of law. With that said, though, one must understand that Credit Restoration Consultants is not a law firm and that none of its employees is an attorney licensed to practice law in the state of Florida. As such, Credit Restoration Associates cannot provide legal advice nor represent any individual before any court or in any legal proceeding. In the event that legal representation is required, Credit Restoration Associates may provide an appropriate referral for consultation.

Credit Restoration Associates Hour

Have bad credit? Need credit repair? Care to repair your own credit or even hire a credit service organization? Before you do so, you should tune into the Credit Knowledge Hour with credit repair expert Link Robertson. Link can be heard weekday's on the 9's - both 9:00 a.m. and 9:00 p.m. eastern time - on AM 1140 WRVA in Richmond Virginia. For those listening online, streaming audio can be accessed at http://www.WRVARadio.com by clicking on the listen live link.

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2008-10-22T20:07:00.000-07:00

Credit Cards

Because of my bad credit, I recently contacted a credit repair company. They claim that, for a fee, they can clean up my entire credit record. Is that true and, if so, how can they do it?

In today's society, where credit cards have become as commonplace as cash, credit purchases have become more and more popular. This means that a greater number of consumers are being plagued with credit problems and bad credit histories. With this surge of bad credit comes the credit repair companies, promising to undo the damage the borrowers have done.

These credit services businesses often make promises to the consumer that they can clean up or repair the consumer's bad credit record for a fee. What these companies do not tell the consumer is that only outdated or incorrect items may be deleted from his/her credit history. The fact is, consumers can do that themselves. They will also promise to obtain credit cards or other extensions of credit for those with blemished credit histories, or with no credit history at all.

Another problem associated with some credit repair companies is the fact that they are transient, operating out of temporary offices or through post office boxes. Many charge the consumer in advance for their services. When the consumer realizes that little or nothing has been done to fix the consumer's credit, the company has often closed or left town, leaving no trace.

The Virginia Credit Services Businesses Act requires credit service companies to register and post a bond with the State Division of Consumer Affairs (DCA). This allows DCA to identify those credit repair businesses operating within the State, and to verify if the businesses are, in fact, disclosing the required information to consumers.

In addition to companies promising consumers they will improve or obtain an extension of credit, the Act also covers companies charging money simply for referring a consumer to another institution for credit. It is illegal for credit repair businesses to charge for this referral if the credit that would be extended is under the same terms as those available to the general public. Exempt from this law are financial institutions insured by the Federal Deposit Insurance Corporation (FDIC) or the Federal Savings and Loan Insurance Corporation (FSLIC), licensed real estate brokers, lawyers, consumer reporting agencies, certain nonprofit organizations and broker-dealers registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission.

Companies also are prohibited by law from making any misleading or untrue statements to creditors or consumer reporting agencies regarding a customer's credit worthiness. The business must provide each potential customer with a written information statement outlining the consumer's rights under the Fair Credit Reporting Act, and giving a complete and detailed description of the services to be performed by the credit services business and the amount due.

Credit Services Businesses contracts must contain a three-day cancellation clause. Under the Act, the credit repair company cannot charge or receive any money until their services have been performed in full.

The Fair Credit Reporting Act

The Fair Credit Reporting Act gives consumers the right to obtain whatever information is in their credit file. If a consumer has been denied credit, the creditor is obligated to disclose the name and address of the credit bureau from which they received the information. The bureau will give the consumer a report on his/her file free of charge if the inquiry is made within thirty days of the credit denial. Consumers can contact the credit bureau if any of the file's contents appear to be inaccurate or incomplete. The credit bureau is required by law to reinvestigate any information on a consumer's credit record that he/she disputes. If the information is proven incorrect, it must be deleted from the file. If the facts are true, however, nothing can be done to have them removed from the record. Most negative information, such as late payment on bills, can be kept on file for seven years. A bankruptcy will remain on record for ten years. Time is often the only way to cure a bad credit history.

Honest Credit Restoration:
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Credit Restoration Associates
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The First Post.

2008-10-20T20:19:00.000-07:00

Hello CRA financial valued clients. This is our first post. Remember, the premier credit restoration system is found at: http://www.CreditRA.com

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